As Canada’s commercial insurance market continues to soften, many carriers are asking a crucial question: how do you know when you are getting close to the bottom?
Soft markets rarely move in a straight line. Some segments ease faster than others, competitive pressure shifts unevenly, and broader economic forces can obscure what is really happening.
For Obaid Rahman (pictured), executive vice-president, commercial insurance at Definity, the answer lies in watching a mix of internal signals and market-wide trends – the combination of cues that shows where the cycle is truly heading.
“On the inside, we can see it,” Rahman said. “We see, directionally, where the market is going.”
But he emphasized that understanding a soft market is not just an academic exercise – it’s a strategic requirement. The carriers that misread the bottom risk overcorrecting, falling behind on investment, or leaving profitability on the table.
Rahman said the earliest (and often most reliable) warning signs come from internal performance patterns. Unlike external indicators, which lag, internal data reflects the market as a carrier is experiencing it in real time.
The first internal cue is the win ratio: how frequently the carrier is securing desirable new business or retaining high‑quality accounts. When markets are extremely soft, win rates tend to fall because competitors are aggressively pursuing growth and driving down prices on many accounts. As the market begins to stabilize, win ratios typically improve as aggressive discounting eases.
“We start to see it in terms of how often we’re winning on things,” Rahman said. A rising win ratio, even modestly, can indicate that pricing aggression is easing and that competitors are beginning to exert more restraint.
The second internal signal is how difficult it is to defend strong accounts. In a deep soft market, even profitable renewals trigger intense pressure as carriers fight to retain attractive business. When that pressure starts to moderate, it often means competitors are becoming more selective and less willing to chase margin-dilutive growth.
“You start to see it on how hard you’re fighting on certain accounts where margins are good,” he said. The intensity of those battles – or lack thereof – can be an early sign that pricing discipline is returning.
A third internal cue is less formulaic but equally important: the overall direction of quoting behaviour, broker feedback, renewal patterns and competitive reactions. Individually, these may seem anecdotal, but together they form the frontline intelligence carriers use to assess movement in the cycle.
While internal data offers forward-looking insight, Rahman said there is one external indicator that reliably reflects where the market sits at a macro level: industry-wide written premium growth.
“You look at the written premium or revenue for the industry as a whole,” he said. When that growth slows into the mid to low single digits, it is often a sign that the market has reached, or is nearing, its softest point.
Premium growth across the industry reflects a blend of exposure change, new business activity and – crucially – average pricing movement. When growth falls sequentially from double-digit, to high single-digit, to mid single-digit, and finally low single-digit, it is usually because pricing has been steadily declining.
“That would be the macro indicator,” Rahman said. “It would say you’re starting to maybe get close to the bottom.”
He added that current premium growth suggests the industry may already be in that zone. “Where we are today would seem to suggest we are getting fairly close to the bottom,” he said. “There isn’t necessarily that much more room to go.”
Still, the timing of a turn in the cycle is notoriously difficult to pinpoint. “Is that one quarter, two quarters, three quarters? It’s hard to say,” he noted. Soft markets can stall at the bottom for several quarters before pricing momentum meaningfully returns.
Rahman warned that focusing too narrowly on short-term top-line performance can expose carriers to long-term disadvantages – especially around modernization and AI investment. During soft markets, these investments can be a hard sell internally because they add cost at a time when pricing is under pressure. But delaying them, he said, risks falling behind more prepared competitors.
“Just having the technology doesn’t immediately make you efficient,” he said earlier in the interview. “You have to change your process and your workflows.” That level of transformation takes time – often years – and carriers that pause during a soft cycle may struggle to catch up once the market turns.
