Canadian businesses may be insuring companies that no longer exist in the form their policies assume, Lockton Canada warned in its first Canadian market update.
The report, released this month, argues that trade disruption, inflation and supply-chain changes are shifting the values and exposures behind commercial insurance programs faster than annual renewals can keep up with.
“This report is intended to help leaders challenge outdated assumptions and ensure their insurance and risk strategies reflect the businesses they operate today—not the businesses they insured a year ago,” said Stéphane Lespérance, chief executive of Lockton Broker, ULC.
Lockton points to a sharp escalation in trade tensions this year. According to the report, the US declined on July 1 to extend the Canada-United States-Mexico Agreement (CUSMA) for a further 16-year term, putting the agreement into annual reviews. In late August, the US imposed 50% tariffs on $27.6 billion of Canadian goods, and Canada responded on September 8 with counter-tariffs on the same value of US imports. Lockton said autos, steel, aluminum and lumber are among the sectors already affected.
The insurance consequences are direct. Inventory can cost more to replace once duties are paid, margins on tariffed products may have changed, and inflation can raise replacement costs. Lockton said property values, business interruption calculations, cargo limits and project insurance should be reviewed whenever the business changes materially, not just at renewal. Companies with US operations, customers or sales should also check that their liability limits reflect that exposure.
The broker also warned that customers and suppliers may be under more financial strain than their latest statements suggest. It recommended businesses review supplier and customer concentrations, contracts, customs compliance and the assumptions behind their business interruption cover.
With infrastructure investment rising, including 15 projects worth more than $125 billion through the federal Major Projects Office, Lockton said power, transport networks, ports, digital infrastructure and specialized equipment can all become single points of failure. It urged businesses to test their policy wording against realistic scenarios such as a port closure, transport stoppage or utility shutdown.
Workforce pressures add to the strain. Lockton noted that unemployment held at 6.4% in August, yet skilled trades remain scarce, meaning a softer labor market doesn’t necessarily give companies access to the skills they need.
Despite the economic backdrop, Lockton said insurance conditions remain favorable for many Canadian commercial buyers, though capacity and pricing vary by line, industry and risk. It urged buyers to use that leverage to improve terms, address exclusions and revisit limits, rather than focusing only on price. Lead insurer strength, claims capability and coverage certainty matter just as much, it said.
That echoes Aon’s latest Canadian market update, which found pricing flat to down for well-run risks heading into 2027.
For commercial brokers, the report supports a shift from annual renewals to mid-term check-ins. Clients exposed to tariffs may be underinsured on inventory and business interruption without realizing it, a gap that only shows up after a loss. The soft market gives brokers room to fix those gaps now, before conditions harden.
