For Canadian insurers, the challenge in 2026 is not simply how to grow, but how to grow in a market where broad expansion is harder to achieve.
That is the view from Jennifer Baziuk (pictured), insurance consulting leader at EY Canada, who says a low-growth, highly competitive environment is forcing insurers to be far more selective about where they compete and how they differentiate. Rather than chasing growth across the board, carriers are being pushed to focus on the areas where they can build a clearer edge, whether through product design, stronger risk selection or better customer experience.
“In this environment, insurers need to be more targeted about where they compete and how they differentiate,” Baziuk said.
That more disciplined approach is becoming essential because insurers are operating against a backdrop that is growing more complex on several fronts at once. Baziuk points to persistent volatility, climate risk and rapid technological change as the biggest forces reshaping Canada’s insurance market in 2026. Economic and geopolitical uncertainty, she says, is no longer something the industry can treat as temporary. Instead, it has become embedded in the operating environment, making underwriting, capital allocation and long-term planning more difficult.
At the same time, insurers are dealing with rising losses from wildfires, floods and severe storms, all while navigating regulatory pressure, cost challenges and the growing importance of artificial intelligence. The combined effect is an industry that is being pushed toward deeper, broader change.
“Together, all these forces are pushing insurers toward continuous, enterprise-wide transformation rather than incremental change,” Baziuk said.
That transformation imperative is not unique to Canada. Many of the pressures facing domestic insurers are the same ones affecting markets around the world. Carriers globally are contending with economic and geopolitical volatility, climate-related losses, expense pressure and the need to scale digital and AI capabilities quickly. But Canada also has its own complications, and those local factors are adding another layer of difficulty for insurers already trying to navigate modest growth.
Baziuk says climate risk is especially pronounced in Canada, where wildfires, floods and severe storms are increasingly straining claims capacity and reinsurance strategies. At the same time, trade volatility and supply chain sensitivity are having an outsized effect because of Canada’s exposure across manufacturing, transportation and resource sectors. Those pressures feed directly into commercial auto, cargo and specialty lines, making the competitive landscape even more challenging.
In that kind of environment, the question is not just where premiums can be written, but where insurers can write business profitably and sustainably. For Baziuk, the best opportunities will come from being more precise in how products are designed and how risks are assessed, particularly as customer and market needs become more interconnected.
“Our outlook suggests the biggest opportunities lie in designing products that better address emerging and interconnected risks,” she said.
AI is likely to be a major part of that equation. As the technology moves beyond the pilot stage, Baziuk says its real value will come from being embedded into core business processes rather than treated as a side initiative. The most meaningful impact, she argues, will be in the places where AI can directly improve speed, accuracy and decision-making across the insurance value chain.
In underwriting, that means improving risk assessment and pricing through the use of broader data sources and faster, more dynamic decisions. In claims, it means better triage, improved fraud detection and shorter cycle times, especially as insurers contend with more frequent and more complex losses. On the customer side, AI is helping raise expectations by enabling more personalized service, faster interactions and greater transparency.
“As AI moves beyond experimentation and becomes embedded as a core business capability, its most meaningful impact is where it directly improves speed, accuracy and decision making across the value chain,” Baziuk said.
Even so, technology alone is not the story. In a low-growth market, new tools matter most when they support a sharper competitive strategy. For insurers, that means using AI and data not only to work faster, but to make better choices about which risks to pursue, where to invest and how to stand out in an increasingly crowded field. It also means turning efficiency gains into real competitive advantages by reinvesting savings into capabilities that improve responsiveness and customer experience.
That is likely to define the winners in 2026. With growth remaining modest, insurers will have less room for broad, unfocused expansion and more pressure to show discipline in both strategy and execution. Those that can align capital, product development and operating change around a clear market position will be in the strongest position to outperform.
“With overall market growth remaining modest, insurers that can sharpen focus, deploy capital more selectively and execute transformation at scale will be best positioned to generate sustainable growth,” Baziuk said.
