Canada’s property and casualty (P&C) insurance market is showing signs of softening, with insurers offering broader coverage and more favorable terms as underwriting capacity expands and competition heightens, according to Aon’s Fall 2025 Canadian Insurance Market Update.
The report noted that insurers are prioritizing client retention while maintaining strong underwriting results.
Russell Quilley, head of Commercial Risk and chief broking officer for Canada at Aon, said the environment allows organizations to re-evaluate and optimize insurance strategies to better align with shifting business objectives.
Property insurance remains resilient despite a series of catastrophic weather events this year. Aon said improved profitability and expanded capacity are supporting broader terms, but properties in catastrophe-prone regions continue to attract stricter scrutiny. This pattern mirrors conditions in the US, where increased capacity has moderated rate growth, although exposure to hurricanes and wildfires continues to challenge underwriting discipline.
Cyber insurance in Canada is evolving in line with global markets. Aon highlighted that organizations with strong cybersecurity and incident response protocols are achieving favorable pricing and coverage, a trend also seen in Europe, where insurers have adopted a risk-differentiated approach. While Canadian cyber rates are stabilizing, the market remains more cautious than in some Asian markets, where rapid digital adoption is driving demand faster than capacity growth.
Extreme weather remains a defining pressure point across all regions. Aon noted that Canadian insurers are adjusting catastrophe models to reflect the rising frequency of severe events, similar to approaches taken in Australia, where floods and bushfires have reshaped underwriting practices. The need for resilient insurance programs, Aon said, is becoming a universal challenge for global markets.
Casualty rates in Canada remain stable, reflecting healthy competition, steady claims activity, and limited capacity constraints. In contrast, certain US casualty lines, particularly excess liability, remain pressured by litigation costs and social inflation. Canadian insurers, however, have not faced the same level of severity in claims, keeping deductibles and terms steady for most buyers.
The construction insurance sector in Canada is also seeing competitive conditions, with insurers expanding capacity and tailoring solutions to contractors and project owners. This aligns with broader trends in the UK and European markets, where competitive pricing and custom risk solutions are being used to capture business in large infrastructure and renewable energy projects.
Overall, Aon said Canada’s insurance landscape is tracking closely with global softening trends, though local factors such as exposure to natural catastrophes and moderate litigation risk continue to shape underwriting. Insurers remain focused on balancing growth with risk discipline as competition intensifies heading into 2026.
