Canada’s commercial insurance market continued to loosen in Q3 2025, with Applied Systems’ latest Commercial Index showing the most significant easing in renewal rate increases in years as all major business lines posted lower pricing momentum.
The index showed both year-over-year and quarter-over-quarter average renewal rates declining across the most commonly placed lines of business, with an overall average premium renewal rate increase of 2.90% in Q3 2025, down from 5.52% in the same quarter of 2024.
Quarter-over-quarter comparisons also reflect this easing trend. Business and Professional Services saw renewal rates decrease to 2.72% in Q3 from 3.00% in Q2 2025. Construction, Erection, and Installation Services dropped from 3.56% in Q2 to 2.81%. Hospitality Services declined from 4.53% to 2.33%, while Real Estate Property fell from 3.38% to 2.41%. Retail Services averaged 3.90% in Q3, down from 4.62% in Q2.
Steve Whitelaw, SVP and general manager, Canada, Applied Systems, said the data reflects a broader softening of the commercial lines market. He noted that the Applied Commercial Index serves as a benchmark for both insurers’ pricing decisions and brokers’ recommendations as the industry moves toward year-end.
The trend of decreasing renewal rate changes suggests that businesses may benefit from a more favorable commercial insurance environment, with more competitive pricing and potential for enhanced terms. For brokers, the softening market may allow increased flexibility in structuring coverage for clients, while insurers may need to balance the competitive landscape with underwriting discipline to maintain profitability.
Looking ahead, the market outlook for commercial lines in Canada suggests continued softness into early 2026, particularly for sectors with low loss activity and strong risk management practices. Insurers are likely to continue offering modest rate reductions, while maintaining selective underwriting standards to mitigate exposure.
Brokers may find opportunities to negotiate better coverage and terms for clients, particularly in competitive lines such as Business and Professional Services, Real Estate Property, and Retail Services.
However, sectors with higher claims histories or emerging risk exposures may still face cautious pricing and underwriting scrutiny. Overall, the market is expected to remain competitive, with both insurers and brokers needing to carefully balance risk, pricing, and client needs in the year ahead.
