Canada’s commercial insurance market is entering a period of softening, with composite rates down approximately 3% in Q1 2025, according to Marsh’s Global Insurance Market Index. But that number, while encouraging, tells only part of the story. The relief is uneven, and for many clients, the pressure remains firmly in place.
Jennifer Pridham (pictured), director of commercial lines at McFarlan Rowlands, said that brokers must be vigilant not to oversimplify current conditions. “Business owners talk to each other; they know when rates are dropping,” she said. “But in sectors like agriculture, hospitality, or certain construction trades, premiums aren’t decreasing. Markets are still tight.”
The Applied Commercial Index reinforces this point. Renewal rate changes fell from 6.14% in Q1 2024 to 3.85% in Q1 2025. But construction clients still saw a 3.85% average increase, with hospitality at 3.08%, retail at 4.57%, and real estate at 3.58%. These segments may be softening, but they’re far from soft.
In this environment, brokers need more than a price-first approach. Pridham urges a focus on strategic placement, particularly in classes like environmental or catastrophe-exposed risks. The key, she says, is showcasing strong risk control.
“If they’re not already in place, partner with insurers offering those services. Clients willing to invest in risk management can often find new options,” she said.
She also recommended that brokers revisit negotiations with underwriters. What was off the table a year ago – such as profit-sharing arrangements on large, profitable accounts – may now be back in play. Understanding where reductions are being offered allows brokers to remarket more effectively and position their clients for better terms.
Cyber is one area where brokers can make meaningful improvements. Marsh reported a 6% drop in cyber premiums in Canada during Q1. For clients who deferred cyber coverage during harder markets, now is the time to complete their portfolio. “It’s the perfect time to revisit cyber,” said Pridham.
The perception of a soft market can mislead clients, especially when media headlines don’t align with their renewal experience. Pridham said brokers are doing good work explaining persistent capacity issues, but challenges remain.
“There’s always that outlier carrier offering lower premiums,” she said. “Brokers have to explain that these carriers might be less sophisticated, chasing short-term gain.”
That explanation is crucial for sectors still experiencing constraints. Clients aren’t just facing limited access to markets - they’re also contending with price pressure and increasingly stringent compliance requirements. In many cases, the cumulative strain is just as intense as it was at the peak of the hard market.
As quote volumes increase with the perception of market softening, many brokerages face internal pressure to keep up. At McFarlan Rowlands, Pridham said they’ve addressed this through centralized marketing.
“That frees salespeople to focus on acquiring new clients while a dedicated team handles remarkets and submissions,” she said.
This model doesn’t just improve workflow; it also enhances market intelligence. “The marketing team knows which insurers are writing what,” said Pridham. “When underwriters are calling repeatedly about quotes, it helps to have a team that can triage and tailor efficiently.”
Across the market, there’s no denying that average rate trends are softening. Globally, Marsh reports a 3% drop in commercial insurance pricing in Q1 – nearly every region and product line saw declines. In Canada, cyber led the shift with a 6% reduction, followed by property and D&O. Even casualty lines fell 2%, although auto liability remains under pressure due to legal cost inflation and high verdict exposure.
But averages can be deceiving. In sectors like construction, which has seen input costs rise by over 66% in the past five years, underwriting scrutiny remains intense. And for clients in catastrophe-prone industries, meaningful relief is still out of reach.
For brokers, the challenge is to read the moment clearly – not through a pricing lens alone, but through strategic and operational awareness. Pridham summed it up simply: “Don’t assume the soft market applies to everyone. Use this time to enhance coverage, not just reduce premiums.”
