Canada’s soft commercial insurance market will likely hold through 2027 before firming in 2028 and 2029, according to Paul Fletcher (pictured second from left), managing director of Aviva Business & Broker Distribution, who said a growing share of Aviva’s contractor book is now forecast to lose money.
Speaking on an insurer executive panel at the Insurance Brokers Association of Ontario’s (IBAO) 2026 convention in Toronto, Fletcher said Aviva splits its contractors class into 16 subsegments and forecasts which will lose money over the following 12 months. Last October, three were forecast to lose money. When Aviva redid the analysis in June, the number had jumped.
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“The number in contractors is now eight out of 16 predicted to lose money. Will they all lose money? Who knows? But the moment is coming, and our industry needs to be sustainable,” Fletcher said.
He said it is impossible to say exactly when the market will turn.
“No one has the crystal ball here. But you’re going to see similar competitiveness through 2027. But you’re going to start to see some segments where questions get asked, and then probably into 28, 29, you’ll see some more firming,” Fletcher said.
Fletcher said two forces are pulling against each other. On one side, capital is plentiful, and global conditions make Canada an attractive place to deploy it.
Rising interest rates may also tempt some insurers in longer-tail lines to lean on investment income, he said. On the other side, the same inflation pushing up interest rates is driving up claims costs, while businesses are under more financial stress.
“That line around claims inflation and dropping rates is getting closer and closer,” Fletcher said. “We need to be sustainable and maintain our discipline and still compete.”
Peter Janzen (pictured centre left), executive vice-president and president of Intact Insurance Canada, put the soft market’s remaining life at a similar length.
“I think 18, 24 months soft market is realistic, and don’t underestimate the tolerance for pain,” Janzen said.
Matthew Turack (pictured second from right), group president and chief operating officer of CAA Insurance, said he is already seeing commercial rate reductions stop in some specialty markets, and in some cases rates starting to rise. Turack said current-year loss ratios are climbing. He agreed the shift to a harder commercial market would likely take 12 to 18 months, because clients won’t trigger a rate increase before their renewal.
“If I’m a commercial client, I’m not going to cancel my policy midterm to pay a higher rate. I’ll wait out the 12 months at my lower rate until my renewal comes in,” Turack said.
When the moderator asked brokers in the audience whether they were seeing “rogue” players cut prices to grab business, a number raised their hands. Janzen said the problem might be smaller than it looks.
“I think it’s a little bit of perception. I think one of those stories gets a lot of profile and noise, and I think for the most part, it’s pretty stable,” he said. “The combined of the industry is still profitable, so I think it’s largely in a good shape.”
He described pricing differences between insurers as “market dynamics at work,” and said a large capacity provider out of the UK that has built significant market share is acting as a “pressure release valve” for domestic players facing profitability issues.
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Evan Johnston (pictured right), president and CEO of Wawanesa, said the mutual will use data and selective underwriting on rate decreases, but won’t follow the market down.
“We manage the business on a long-term basis, and one of the best compliments I heard yesterday from one of our broker partners is just how stable we are as a market,” Johnston said.
Paul MacDonald (pictured centre right), executive vice-president of personal insurance and digital channels at Definity, said he was recently asked why insurers can’t figure out a cycle that keeps repeating. His answer was that this one is moving faster.
“The answer appears to be the amplitude and speed is greater than past cycles,” MacDonald said. “It happens so quickly that we, as an industry, have a much harder time to adjust to very swift changes.”
He said some of the current pressure comes from a lack of discipline and from players, often non-domestic, trying to take share, which can help customers in the short term but lead to price shocks the following year.
“We have to be able to respond much faster, and we have to work on being more efficient and more cost sensitive, so we have the ability to absorb these kinds of cycles. If we don’t do that, then we’re going to struggle,” MacDonald said.
