Canadian companies are enjoying relief from years of hard market conditions, as fresh capacity continues to flow into the country’s insurance sector. According to Michael Lewis (pictured), chief commercial officer at Marsh McLennan Canada, the overall direction is clear: the market has softened, and that cycle is expected to carry through at least 2026.
“Look at the market. There’s a steady stream of new entrants into Canada and new capacity coming into Canada,” Lewis told Insurance Business.
This, he added, is creating a soft insurance market at this point in time. All lines have their specificities, but generally, “we can say that we’re entering (if not have entered) a soft insurance cycle, which means the capacity is cheaper, and we’re seeing a lot of rate reductions for clients,” he said.
While the overall picture points to falling premiums, Lewis stressed that not every line is behaving in the same way. Property, directors’ and officers’ (D&O) liability, and cyber are seeing the steepest cuts, with many clients benefiting from the trend.
“We’re seeing double-digit reductions in property insurance, in D&O and cyber across the board,” he said. “Liability is flat to a couple of percent down.”
At the same time, businesses with exposure to the United States remain outliers. Cross-border risks, particularly in sectors like transportation, are bucking the soft market trend. Aviation is another pressure point, where hull loss exposures linked to the Russia-Ukraine conflict and other global factors have driven pricing higher.
“Anything with cross-border or US exposure is certainly seeing plateaus or increases,” Lewis said. “And there are some industries that, like transportation, are definitely seeing an increase in a challenging market. I mentioned aviation as well, because of some of the hull losses through the Russia-Ukraine war and others that are putting pressure on the market as well,” he added.
Another area to watch, Lewis said, is trade credit. While capacity remains available for now, insolvencies and supply chain disruptions could begin to strain the segment.
Rising insolvencies and payment challenges among companies could put trade credit under closer scrutiny, despite there still being adequate capacity available in the market at this time, he said.
If defaults mount and claims activity accelerates, Lewis warned, conditions could shift.
“If insolvencies start to creep up, which we’re seeing, and trade credit claims start to increase because people aren’t paying their bills, there’s a likelihood that capacity can dry up, or the market can start to get a bit harder.”
Asked whether 2026 might bring a return to harder market conditions, Lewis was measured. He believes the softening trend will continue, though perhaps at a slower pace.
“Do I think 2026 is going to be another soft insurance cycle? The answer is yes,” he said. “Do I think we’re going to see rate reductions in some of those lines as fast as we’re seeing them right now? Probably not,” he said.
Property and liability, he added, should remain soft, given the amount of capacity currently available.
From a property and liability point of view, there’s enough capacity in the market at this point in time that we’ll still see a soft insurance cycle through 2026, Lewis said.
“I don’t see that anything will really change that,” he added.
The key factor that could upset this outlook, Lewis cautioned, is climate-driven catastrophe risk. Canada experienced its largest-ever natural catastrophe loss in 2024, at $8.6 billion, yet the impact on property pricing was muted because the United States and Europe had relatively benign loss years.
“The thing that really changes the property market is natural catastrophe and climate-related losses,” Lewis said.
“If [Canada’s losses] were compounded with international losses, it would have been different… The real reason that we’re not seeing property rate increases is that the US and Europe were fairly benign in terms of major CAT losses last year.”
That could change quickly if Canada’s severe events overlap with another round of global catastrophes, he warned.
“If we see another Harvey, Irma, and Maria year in the US, compounded with what we’ve seen in Canada (with the wildfires this summer or the Jasper loss), things can swing significantly,” he said.
