Canada’s agricultural insurance sector is grappling with intensifying challenges. According to Ken Worsley (pictured), chief operations officer at Nova Mutual Insurance Company, the sector is under pressure from all sides – shrinking capacity, rising losses, and shifting farm dynamics.
“The Canadian agribusiness segment is really facing a convergence of challenges,” Worsley said. “Primary and reinsurance capacity constraints, rising system costs, escalating loss severity and frequency – it’s creating unfavorable loss ratios across the board.”
That surge in claims is pushing insurers to reduce exposure or withdraw entirely from high-risk areas like confined livestock operations. “Some insurers are scaling back capacity or exiting the market entirely,” he said. “Those are the ones seeing a higher propensity of loss.”
At the same time, farms themselves are changing. Each new Canadian Census shows fewer farms, but each is larger – with more acreage, more equipment, and significantly more to insure. But insurance capacity hasn’t kept pace.
“As these farms get larger, insurance capacity isn’t keeping up,” Worsley said. “Despite increased demand, insurers are struggling to meet it.”
“It can add between 15 and 30% of cost,” Worsley said. “The barn we insure now might suffer a total loss fire, but the one we have to rebuild is much more expensive.”
Tariffs on steel and aluminum are compounding the issue, increasing the cost of rebuilding and replacing not just barns, but farm machinery and contents. These factors are making the economics of risk transfer more costly at a time when Canadian Farmers are struggling with other non-insurance costs.
At the policy level, possible changes to Canada’s supply management system are adding more uncertainty. If trade negotiations result in loosened controls, dairy producers may have to expand to maintain revenue.
“If you’re milking 200 head of cattle to make the same money, maybe now you need to milk 300,” Worsley said. “That means a bigger barn, more feed, more costs – all of which become capacity constraints because we’re insuring more assets.”
To spread exposure, carriers are increasingly relying on shared risk models and facultative reinsurance. But even those models are being stretched. “Sometimes some of these farms are getting so large, you have a subscribed risk that also has facultative reinsurance on it,” Worsley said. “Capacity is one of the biggest pressures due to all those costs.”
As farms scale and automate, there are fewer eyes on-site to catch small problems before they become claims. That’s where Nova Mutual is doubling down on technology.
“There are fewer people on site to notice when issues arise,” Worsley said. “So we’re looking to technology to close that gap.”
Nova has backed several loss-prevention tools aimed at stopping problems before they start. One example is PrevTech Innovations, which provides electrical monitoring to catch faults early. “It finds electrical faults well before they become something serious,” he said. “It gives the farmer time to fix those issues before they become a problem.”
Other tech includes thermographic imaging for electrical systems and Allied fireballs – automated fire suppression units promoted for use in barns and machinery. Nova is also preparing to roll out an AI-powered self-inspection tool that uses smartphone cameras to flag risks like corroded plumbing and electrical hazards.
“We take that information and develop recommendations,” Worsley said. “We work with the broker and the policyholder to get these things remedied. It reduces our inspection costs, which means we can inspect more.”
The insurer is also streamlining its farm product line to help brokers focus less on paperwork and more on clients. “We’re innovating our products to help our distribution partners spend more time with clients and less time on administrative tasks,” he said.
Nova conducts in-depth safety and fire prevention surveys, but Worsley sees a broader opportunity for impact – particularly through his involvement with the Canadian Farm Builders Association (CFBA). While the federal government led the development and rollout of the new National Farm Building Code, the CFBA was actively consulted during the drafting process. Following its release, the association took the lead in educating and training builders, suppliers, members, and building officials on the updated standards.
“The code was designed to build in resiliency and life safety – but it adds cost.” Worsley said
CFBA’s work spans all compliance areas, including fire, electrical, and worker safety codes. Insurers are watching closely, not just to underwrite risk, but to anticipate future shifts in pricing and coverage.
“We have to plan how we’re going to change our product and pricing and capacity allocation,” he said.
Farm premiums are already high – and climbing. As costs surge, affordability becomes a looming question.
“Premiums aren’t small on some of these large farms,” Worsley said. “And it’s going to get to the point – where are they affordable?”
Unless insurers and farm operators align around long-term prevention and innovation, he warned, the current model won’t hold. “If we don’t do a better job at prevention in a proactive sense, this is going to continue to be a problem,” he said.
