The Canadian hospitality insurance market is expected to soften further in 2026, extending a trend that has defined the past year and a half. That’s according to Julia De Stefano (pictured), senior underwriter and team lead for hospitality at South Western Group (SWG), who says increased competition and new capacity are reshaping the sector.
De Stefano described the current market as softening steadily across commercial lines, with hospitality following the same path. The pandemic had left only a small number of carriers active in the space, but that has shifted. More insurers are now moving back into hospitality, bringing additional capacity and contributing to competitive pricing.
“[We have] been in a soft market for, I would say, a year, or year and a half … and it’s been steadily getting softer,” De Stefano said.
One trend she highlighted is the growing use of subscription policies, where multiple insurers share the same risk. This reflects both the rising costs of rebuilding and insuring properties, and carriers’ renewed appetite to participate in the class without taking on the full exposure.
Looking ahead, De Stefano expects the softness to continue into next year, though at a slower pace than in 2025. Property insurance, in particular, remains an area where she anticipates further reductions.
“Property rates were really high in the hard market, and liability was always flexible,” she said. “So I’ve been seeing a lot of property rate reduction, and I do think that’s going to continue into next year.”
While reductions may not be drastic, she noted that MGAs are likely to adjust rates further in order to stay competitive against the standard market.
Despite the more competitive environment, De Stefano emphasized that underwriting fundamentals remain central. Claims history continues to be one of the most important factors, given the frequency of incidents in the hospitality sector.
“Hospitality is one of the sectors that have the most claims, just because there’s a lot of risk there,” she said.
Extreme weather events, amplified by climate change, are another growing influence on underwriting. The impact of storms and other natural catastrophes is being felt across property lines, with hospitality businesses exposed to the same perils.
Finally, De Stefano pointed to insured experience as a key underwriting consideration in the post-pandemic landscape. She observed that many people pivoted into hospitality during COVID-19, opening restaurants or other ventures without prior industry background. That lack of experience can affect not only day-to-day operations but also payment reliability and long-term viability.
While rate softening and increased competition are creating new dynamics for hospitality insurance, other underlying challenges remain. Insurance Business has previously reported on how staffing shortages continue to weigh heavily on operators, with direct implications for liability exposures.
Jake Hovinga, commercial lines manager at Mitch Insurance, said the sector’s labour gaps are one reason insurance rates have yet to return to pre-COVID levels.
“We have somehow skated through COVID, and the sector is now mostly in the rebuilding mode, trying to strive again,” Hovinga said.
The most significant impact of these shortages is being felt on the liability side. With fewer qualified workers available, operators often hire less experienced employees or rely on overstretched staff. This creates conditions where mistakes are more likely, he said.
According to Hovinga, reduced staffing and training pressures increase the likelihood of everyday mishaps. Accidents in kitchens, overlooked safety procedures like missing “wet floor” signs, or gaps in record-keeping all become more common in a stressed operation.
“There can be all sorts of liability claims if you have a stressed operation,” he said.
The erosion of training standards is particularly concerning. In some cases, new hires may not receive adequate instruction on fundamental safety and risk management protocols. Without proper onboarding, tasks such as maintaining incident logs or ensuring compliance with documentation requirements may fall through the cracks, leaving businesses exposed to claims.
The understaffing risks aren’t evenly distributed across the sector. Hovinga said that full-service, dine-in restaurants are especially vulnerable due to the number of employees needed to run day-to-day operations – from front-of-house servers to kitchen staff and dishwashers.
A shortage in any one area can cause cascading operational issues, increasing the chances that less experienced staff are forced to step into critical roles.
In contrast, takeout-focused restaurants tend to face fewer staffing challenges. These establishments, Hovinga said, often rely on smaller teams and can more easily pivot, especially with the support of third-party delivery services. This flexibility helps reduce staffing pressure and, in turn, lowers the operational liability risks tied to overwork or undertraining.
Looking ahead, Hovinga was optimistic that premiums would eventually return to pre-COVID levels. He noted that the broader property and casualty market is beginning to soften, with more insurers expanding their appetites and starting to offer more competitive rates. However, that relief hasn’t fully reached the hospitality sector.
He said that, in cases where businesses are seeing decreases, it’s often not a sign of improving conditions – but rather a reflection of reduced revenue. Because liability exposure is typically rated against revenue, businesses with lower sales may see lower premiums, but it comes at the cost of their bottom line.
“Some may be getting price decreases, but, unfortunately, it's at the detriment of their business not being as successful,” he said.
