Canada’s property and casualty (P&C) insurers exited 2025 in much stronger financial shape, as a sharp drop in catastrophe losses drove better underwriting performance and healthier margins across most major lines, according to S&P Global Market Intelligence.
Among the 15 largest Canadian P&C insurers reporting to OSFI, insurance service revenue increased by more than 6.5%, while expenses fell by 1.9%. The combination pushed the aggregate combined ratio down 4.6 points to 92.4%, signaling a return to solid technical profitability after 2024’s “summer of catastrophe,” which generated more than $8 billion in insured losses.
Structural challenges remain, however, particularly where regulatory constraints on rate adequacy continue to squeeze returns despite consolidation and improved performance elsewhere.
The improvement was particularly pronounced in the property book. For the top 15 OSFI filers, insurance service revenue in property rose 7.4% in 2025, while expenses dropped 14.6% as catastrophe losses normalized.
That stands in contrast to 2024, when a series of severe events – including major flooding, widespread wildfires and the Calgary hailstorm that generated roughly 250,000 claims – produced outsized losses and volatility.
The 2025 results suggest that in a more typical catastrophe year, the largest carriers’ underwriting and portfolio actions are delivering solid returns, even as inflation and reinsurance costs remain elevated.
The picture is far less favorable in Alberta’s private passenger auto line.
Among the 15 largest OSFI‑filing auto writers, S&P reported a gross insurance service ratio of 113.3% in Alberta, compared to 87.4% across the rest of Canada, underlining the province’s role as a persistent outlier on profitability.
Rate constraints are the key pressure point. The extension of Alberta’s 7.5% “good driver” rate cap through 2026 has kept earned premium growth lagging underlying claims cost inflation. Insurers continue to face higher frequency and severity linked to auto theft, weather‑related losses and rising repair and medical costs, leaving margins compressed despite corrective actions.
It was followed by the Lloyd’s Underwriters marketplace at $7.46 billion, Aviva Insurance Company of Canada at $6.74 billion, TD Bank’s Security National Insurance Co. at $6.27 billion, and Co‑operators General Insurance Co. at $5.97 billion.
S&P’s analysis also pointed to a divergence between Canadian and US liability experience. Among the top OSFI filers, Canada’s liability business produced a gross insurance service ratio of 68.8% in 2025 – still strongly profitable, but up 10.2 points year over year.
Intact has argued that Canada’s legal system lacks several of the “social inflation” accelerants seen in the US, such as widespread third‑party litigation funding, punitive damages in many jurisdictions and frequent nuclear jury verdicts. That has helped keep long‑tail liability deterioration more contained north of the border, even as US carriers grapple with sharply rising loss costs in casualty and professional lines.
At the same time, S&P noted that reserving and underwriting adequacy remain ongoing concerns regardless of jurisdiction. The uptick in the liability ratio, even from a low base, is likely to keep Canadian carriers focused on reserving discipline, attachment points, coverage terms and risk selection in casualty portfolios.
