Strategic Opportunity in a Shifting Canadian P&C Landscape
While the Canadian P&C market is generally favourable, the underlying risk environment is dynamic and increasingly complex. Businesses that act now to strengthen coverage, close gaps and prepare for volatility will be best positioned for long-term resilience.
Critical Coverage Gaps to Address
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Despite its frequency and financial severity, cyber exposures are frequently underinsured, particularly by mid-sized organizations.
Cyber risk
These are often outdated or inaccurately modeled, resulting in coverage gaps that surface during loss adjustment.
This coverage is becoming essential in today’s economic climate. As more businesses enter receivership, ripple effects are felt across supply chains.
With restructuring and layoffs accelerating in several sectors, EPL offers critical protection against costly employee-related litigation.
Trade credit insurance
Property and business income valuations
Private D&O and Employment Practices Liability (EPL) coverage
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Here are several strategies business leaders can implement to take advantage of favourable market conditions to improve their risk posture:
Increase limits and broader terms while capacity remains available.
Extend indemnity periods in business interruption coverage to reflect more accurate rebuilding timelines.
Restructure insurance programs, such as moving to layered placements or leveraging alternative markets, to gain flexibility and pricing advantage.
Audit property and income valuations to ensure coverage reflects your true exposure and rebuilding costs.
Expand specialty coverages, especially cyber, EPL and trade credit, to guard against emerging threats.
Partner with a strategic broker who can provide access to specialized markets, offer modeling support, scenario planning and insights into evolving market dynamics.
Strategic Actions to Capitalize on a Favourable Market
Rates in the Canadian commercial property and casualty (P&C) insurance market continued to soften through the first half of 2025, with favourable pricing across most lines and industries. However, macroeconomic uncertainty, loss inflation and the rising frequency of natural catastrophes are contributing to underwriting caution.
For risk managers and business leaders, the current environment presents both an opportunity to enhance protection and a critical window to address emerging vulnerabilities.
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Rebuilding costs are soaring due to inflation, labour shortages and supply chain delays, prompting Canadian insurers to take a much more cautious approach when underwriting catastrophic risks. Many are also expanding their claims teams to respond to future CAT
events and investing in pre-event modeling that can measure potential losses. Tariffs are expected to affect loss costs, particularly on auto lines, as the parts needed to complete vehicle repairs go up. Many carriers are forecasting claims costs could increase 3% to 6%. Similarly, insurers are also closely managing their exposure in wildfire-prone regions and other high-risk geographies.
Global geopolitical instability continues to cast a shadow on the Canadian economy, leading to a greater focus by insurers on balance sheet protection, especially for businesses reliant on receivables and global suppliers.
What to Expect for the Remainder of 2025
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As businesses navigate through economic uncertainty, several risks cannot afford to be overlooked, including:
Cyber risk
Despite its frequency and financial severity, cyber exposures are frequently underinsured, particularly by mid-sized organizations.
Property and business income valuations
These are often outdated or inaccurately modeled, resulting in coverage gaps that surface during loss adjustment.
Trade credit insurance
This coverage is becoming essential in today’s economic climate. As more businesses enter receivership, ripple effects are felt across supply chains.
Private D&O and Employment Practices Liability (EPL) coverage
With restructuring and layoffs accelerating in several sectors, EPL offers critical protection against costly employee-related litigation.
Carrier appetite for risk remains strong in Canada, as both domestic and international insurers pursue diversification from U.S. catastrophe (CAT) exposure.
Many insurers have fallen short of their top-line revenue goals, prompting more aggressive pursuit of Canadian business through Q3 and Q4.
The overall result is continued softening across the market.
However, emerging trends are signaling areas of growing complexity.
Social inflation — once a predominantly U.S. concern — is becoming a larger issue in Canada.
In a recent premises liability settlement in British Columbia, a convenience store ended up paying nearly $1 million plus court costs to a claimant when the case was brought to trial.1 This shift in judicial sentiment is likely to impact casualty underwriting moving forward.
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Renewable Energy
CTVNews.ca, “7-Eleven lawsuit settlement: Judge orders $900K in injury lawsuit,” May 22, 2025.