Canada’s commercial insurance market has been experiencing a softening trend in recent quarters – and that pattern is expected to continue through at least the end of the year.
According to Marc Major (pictured), global placement leader for Canada at Marsh, the sector is seeing heightened competition as capital availability remains strong across various segments.
“The landscape has been very competitive across the board in Canada for available capital,” Major told Insurance Business.
Major noted that, while the trend toward a softer market began to emerge near the end of 2023, it was during the beginning of last year that the shift became more pronounced.
“We started seeing some early indicators in late 2023, but the softening picked up pace in the first quarter of 2024,” he said. Since then, he says it’s been a steady decline in pricing, with some lines experiencing significant rate reductions.
However, the picture isn’t uniform across all segments.
Among the lines most impacted by the softening market, Major pointed to financial products – particularly directors and officers (D&O) insurance – as leading the charge, and added that the trend extended across ancillary financial lines as well.
Cyber insurance has also begun to shift. While the sector previously experienced tightening conditions due to increased loss frequency and severity, Major noted that the cyber market is now showing signs of stabilization and renewed competition.
“Cyber insurance is starting to become a lot more abundant in terms of capacity that's available, and handle on how things are being managed,” he said.
Meanwhile, property insurance – long the poster child for hard market pricing – has finally started to give ground. After several years of steep rate hikes, Major says insurers are now granting modest relief.
“We’ve seen average decreases continue across property insurance,” he said. “Insurers are starting to concede some rebates to their customer base in the marketplace.”
While much of the commercial landscape is softening, not all areas are following suit. Major pointed to one notable exception: Canadian risks with US-based liability exposures.
“Anything that has US liability exposure has remained an outlier,” he said. “In fact, there’s probably more focused underwriting scrutiny on those accounts – especially if they’re tied to mass transportation risks.”
This increased caution, he said, stems from the potential for higher claims volatility and more complex legal environments in the US, which continues to make underwriters wary even amid broader market softening.
As the Canadian commercial insurance market continues to soften, Major said that current indicators suggest that this trend will likely persist through the remainder of 2025 – at least for standard property and casualty lines that do not involve significant exposure to the US market.
In these areas, competitive conditions remain strong, with carriers still offering credits and pricing concessions to clients, he said. While the steep rate reductions seen earlier in the cycle may begin to taper off, a broadly stable and buyer-friendly environment is expected to hold.
“I think that there’s a steadying that is taking place right now,” he said.
However, this projected steadiness is not without caveats. The sector remains sensitive to global developments, including economic volatility, geopolitical instability, and the potential impact of large-scale natural catastrophes.
Such factors, Major said, could place renewed pressure on capital and capacity, depending on how they unfold in the coming months.
For clients with international operations or exposure to emerging risks abroad, these dynamics are being monitored closely by insurers and brokers alike.
In contrast to the relatively calm landscape for domestic risks, businesses with liability connections to the United States are facing a very different outlook, Major said.
These accounts, he explains, continue to draw intense scrutiny from underwriters due to the frequency and severity of US claims activity.
The legal environment south of the border – particularly in sectors such as mass transportation and heavy industry – has produced numerous large-scale verdicts, often referred to as “nuclear verdicts,” which significantly exceed traditional policy limits. This trend, Major said, is causing carriers to reassess their appetite and pricing models.
“I think that that's something that could lead (not across the board, but on individual cases) to a tougher market where the prices are hardened, retentions are increased, and where capacity becomes less available,” he said.
