Canadian commercial insurance rate increases continued to lose momentum in Q4 2025, in line with a broader softening of commercial markets globally and in Canada, according to new data from Applied Systems.
The latest Applied Commercial Index recorded an overall average renewal increase of 2.23% in Q4 2025, down from 5.02% in Q4 2024. All major segments posted lower year-over-year increases, extending a downward trend that Applied said has been in place since mid-2024.
For business and professional services, the average premium renewal rate change in Q4 2025 was 1.83%, down from 2.72% in Q3 2025.
Construction, erection and installation services recorded an average renewal increase of 2.52%, compared with 2.81% in the prior quarter. In hospitality services, the Q4 2025 average renewal rate change was 0.96%, down from 2.33% in Q3. Meanwhile, real estate property saw an average renewal rate change of 1.68%, versus 2.41% previously. Retail services remained the highest of the tracked classes but still eased, at 3.12% in Q4 2025 compared with 3.90% in Q3.
Canada in a wider softening cycle
Applied’s findings are broadly consistent with other market indicators. Marsh’s Global Insurance Market Index recorded a 3% decline in commercial insurance rates in Canada in Q3 2025, the fifth consecutive quarter of composite rate decreases globally and the third straight quarter of reductions in Canada.
Earlier in the cycle, Marsh reported Canadian commercial rates down about 3% across all lines in Q1 2025, with clients using the competitive environment to enhance coverage and reduce retentions.
Against that backdrop, major Canadian carriers are still reporting premium growth and healthy underwriting results.
Intact Financial, for example, has guided to mid‑single‑digit premium growth in commercial and specialty lines over the 12 months ahead, even as it highlights “sustained competition in large accounts” and stronger growth in SME and mid‑market business.
S&P Global recently noted that Canada’s P&C industry insurance service ratio improved to 81.8% in Q3 2025 amid sharply lower catastrophe losses compared with 2024, supporting more competitive property pricing for better‑quality risks.
Canada remains the world’s eighth‑largest insurance market, with total premium volume estimated at US$176 billion (CA $241.12 billion) in 2024 and projected to reach about US$185 billion in 2025, according to Swiss Re Institute, giving carriers scope to compete on price and terms while still growing top line.
Commercial easing versus personal lines pressure
The moderation in commercial rate increases contrasts with continued premium pressure in Canadian personal lines.
Applied’s separate Rating Index for Q4 2025 showed average personal auto premiums up 14.4% year over year and personal property premiums up 7.8%, with increases across most provinces as carriers continue to catch up with prior‑year loss trends and inflation.
That divergence matters for brokers and carriers planning 2026. Commercial clients, particularly in sectors like construction, real estate and hospitality, are seeing more room to negotiate on pricing, limits and deductibles, while personal lines clients are still absorbing sizeable rate hikes.
Commenting on the Q4 commercial data, Steve Whitelaw, SVP and general manager, Canada, at Applied Systems, said the market “continues to soften, following a downward trend since the middle of 2024,” and suggested that lower increases give brokers an opening to revisit coverage with clients.
