As inflation, tariffs and economic uncertainty ripple through Canadian businesses, commercial brokers are feeling the squeeze from both sides of the balance sheet.
For some, the biggest pressure point isn’t just rising claims or insurer pricing – it’s people.
“Seventy‑three per cent (73%) of our expenses are personnel expenses,” said Josh Pillsbury (pictured right), a managing partner at Summit Cover at a recent panel in Toronto. As wages and hiring costs rise, the brokerages “don't get the benefit of inflation on the front end,” he added, because insurance runs on its own hard/soft market cycles that aren’t directly tied to CPI. The result: staff are more expensive, but brokerages are “not necessarily making more on the products that [they’re] selling,” which has become a real margin challenge.
Pillsbury noted that when they launched Summit Cover three years ago, it was a hard market, in the middle of COVID, and “very hard to hire talent, especially remote.” In that short period, they’ve also had to contend with the rapid emergence of AI and now a more hostile macro environment.
Those early headwinds, he said, forced them to think about resilience – something that now mirrors the worries of many of their insureds.
As a brokerage, he said, “we're kind of captive to the… businesses that we insure, and the effects that they see.” Inflation, tariffs and other shocks hit different sectors unevenly. Summit has tried to buffer that by diversifying “across a variety of geographies, [and] a lot of different industries,” because a broker heavily concentrated in one tariff‑exposed niche or region would be “very… affected” when that segment comes under pressure.
In a soft market with rising costs, there’s only so much a retail broker can do on pricing. Summit’s answer has been to focus relentlessly on hanging onto the clients it already has.
Pillsbury described it as a “perfect storm for a retail broker” – economic headwinds, tariff impacts and a soft market all at once. “There's only so much we can control, and there's a lot that's outside of our control,” he said. Their main lever is retention: “that's the number one way for us to protect our margin.”
When a client’s operations change, Pillsbury said, they go back to that data to see “which insurance markets are the best fit for them,” then shop proactively so they “can retain that business so they don't go and look elsewhere and go to another broker.”
For Summit, margin preservation “ultimately [means] just retaining the customers that [they] already have,” rather than counting on higher commission income to ride in on inflation.
That retention playbook depends on treating placement as a data problem, not just a relationship game.
Most of Summit’s commercial clients, Pillsbury said, are “getting by” rather than collapsing, and “the Canadian commercial insurance sector is very resilient.” Insurance is “one of the last expenses to go,” so if the broker loses a policy, it often means the underlying business is in serious trouble.
When a client does have to restructure or relocate because of cost pressures, Summit uses its historic quoting and binding data to remap them to new markets. “We have a lot of data,” he said. “We track every single insurance company that we send [submissions] to and the results that they've sent us historically.”
He pointed out that there are “close to 200 P&C carriers in Canada,” even if the top 10 control most of the market. The broker’s job is to narrow that list: “identify what are those four or five carriers that are [a] good fit for the business at that point in time,” given new locations, operations and appetites, then place accordingly.
Looking ahead to 2026, Pillsbury said that forecasting should be less about predicting macro variables and more on building a brokerage that can survive whatever comes next.
He framed it as a discipline of separating “what you can't control and what you can control.” Most operators, he argued, don’t get up thinking about “what the US President's going to do… nor interest rates.”
Instead, he said, the priority is “making sure that we set our business up for continuity, regardless of what happens.”
