Commercial property insurance rates in Canada, which saw a softening trend in the third quarter of this year, are expected to remain stable well into 2026, according to the latest market analysis by WTW.
This stability is largely attributed to fierce competition among insurers and a high supply of reinsurance capacity, WTW said in its “Insurance Marketplace Realities 2026 – Canada Property” survey report.
The national property insurance market is currently characterized by high capacity, both from domestic and global insurers, leading to increased competition for market share, WTW said.
Rate softening: Rates continued to soften in Q3 2025 as insurers deployed additional capacity, leading to overlined placements. This competition allowed top-tier risks to secure more favourable terms, including better coverage, reduced deductibles, and preferred insurer partnerships.
Capacity influx: Both domestic insurers and foreign markets are competing for Canadian risks. This influx is generating downward pressure on rates, a trend projected to continue into 2026 as reinsurance capacity remains plentiful.
Reinsurance stability: Despite a challenging year for the personal lines market, the commercial sector has been largely shielded.
With historic high amounts of reinsurance capacity available and global reinsurance "rate-on-line" rates softening by about 8% in 2025, commercial property rates are expected to hold steady.
While the commercial market has benefited from competition, a spike in weather-related events has raised concerns, particularly for businesses in high-risk regions, WTW noted:
Wildfire impact: The year 2025 is projected to be Canada's second-worst wildfire season on record, with over 7.25 million hectares burned, second only to the catastrophic 2023 season.
Most insurable losses have hit the personal lines market; however, the annual Q3 spike in weather events may put pressure on insurers to adjust pricing and coverage in fire- and storm-prone regions.
Review coverage: Insureds in these vulnerable regions are strongly advised to annually review their limits, sublimits, and terms. Policy limits must cover damage to physical assets and critical sublimits like civil authority, ingress/egress, service interruption, and business interruption (BI) indemnity periods.
Following significant wildfire losses in recent years, businesses must ensure their BI periods are long enough to cover rebuilding, supply chain disruption, and return to full operation, WTW said.
Easing inflation is a positive sign, the report noted, but other macroeconomic factors are creating lingering uncertainty:
Valuation accuracy: While inflation has eased, insurers emphasize the continued need for accurate replacement values.
Supply chain & tariffs: Businesses are recommended to monitor their supply chains and the cost of critical parts, as lingering tariffs and global uncertainty can affect replacement cost values. Regular site surveys and recommendation updates also remain crucial for securing maximum capacity from insurers.
