As Canada’s hospitality sector moves further from the instability of the COVID years, insurers are beginning to see a different set of pressures shaping risk. Rather than dealing with shutdowns and sudden demand shocks, the industry is now contending with a slower economic cycle, evolving labour dynamics, and a renewed focus on operational resilience.
For Echelon Insurance president Jatinder Bassi (pictured), the sector is entering a period where long-running structural challenges are coming back into focus – and insurers will need to calibrate their approach accordingly.
Hospitality businesses are facing a more difficult operating environment as consumer spending softens and margins tighten. “Whether you call it a recession or a soft recession, I think we can all safely say that we are in a challenging economic environment,” Bassi said. Regardless of how economists label the current cycle, the practical impact is the same: operators are feeling the strain.
A weaker economy affects everything from revenue stability to the ability to invest in upgrades, safety improvements, and staff training. These factors, in turn, influence the overall risk profile that insurers must underwrite. Reduced foot traffic, fluctuating demand, and higher cost pressures can all heighten exposure if businesses are unable to maintain the same level of controls they once had.
According to Bassi, the insurance industry’s role increasingly revolves around helping operators build resilience rather than simply transferring risk. “Where we see ourselves fitting in is by providing a solution to the hospitality market that allows them to stay sustainable and remain resilient in their operations.” That includes reinforcing risk-management programs, providing education on loss prevention, and tailoring coverage to support continuity in a more volatile environment.
Staffing continues to be one of the hospitality sector’s most persistent challenges, though the dynamics have shifted since the height of the labour shortage. During the pandemic, restaurants and hotels struggled to fill even basic positions. Immigration and rapid population growth eventually helped ease some of those shortages, but with inflows slowing and unemployment expected to rise slightly in 2026, the picture is changing again.
Hospitality operations may have a larger pool of job seekers to draw from, but the underlying issue – finding and developing the right talent – remains far from solved. Bassi noted that while extreme scarcity has eased, the sector hasn’t necessarily returned to a “healthy” balance. “If we’re seeing significant lineups for entry-level jobs in hospitality, that signals something is wrong with what’s happening in our labour environment.”
Employers may no longer see lineups for basic roles, but talent development, retention, and training continue to pose challenges. For insurers, the labour picture matters because staffing gaps or inconsistent experience levels can heighten certain risks: insufficiently trained workers increase exposures from slip-and-falls to food safety issues, security problems, and liability claims. In tighter economic conditions, some businesses may also struggle to invest in onboarding or safety programs, compounding the issue.
Bassi expects talent pressures – in different forms – to continue in 2026. “Absolutely, yes,” he said. Healthy competition for jobs can benefit the sector over time, but operators will need to be more deliberate in placing people in roles where they can succeed and grow.
The pandemic caused significant disruptions in the hospitality insurance market, with several large insurers pulling capacity due to uncertainty. That retrenchment created coverage gaps for many operators, particularly in segments viewed as higher risk.
Echelon, Bassi said, was one of the carriers that maintained capacity during that period. He framed that period less as a competitive opportunity and more as an example of how mid-sized insurers often absorb demand when larger players retreat during uncertainty.
Today, hospitality capacity in Canada remains uneven. Some insurers have re-entered the space cautiously, but appetite varies widely depending on region, business model, and risk controls. Loss ratios across the sector have been inconsistent, influenced by inflation, supply-chain pressures, rising repair costs, and more volatile claims severity.
As operators adjust to slower consumer spending and elevated operating costs, insurers will be watching closely to see whether current risk-management practices can keep pace – and how the hospitality sector adapts heading into another uncertain year.
