Two significant announcements on the same day reflect a Canadian life insurance market shifting from digital experimentation to full-scale deployment, with both an established global insurer and a domestic insurtech moving to automate underwriting and widen access.
The commercial urgency behind both announcements is grounded in documented market failure. According to PolicyMe's 2025 Life Insurance Gap Report, 42% of Canadians do not have life insurance or are unsure whether they do. A further 65% said they are unlikely to get life insurance in the next five years, and 25% said they are not confident their family would be financially secure if they died unexpectedly.
A separate study by MyChoice found that despite record aggregate coverage, Canadian households hold an average of $509,000 in life insurance against an estimated need of $595,000. Ontario showed the largest provincial shortfall, with households needing nearly $794,000 but holding only $552,000, a gap of more than 30%.
Meanwhile, industry analysis presented at the 2025 Canadian Reinsurance Conference found that term policy sales dropped from 397,000 in 2019 to 340,000 in 2024, while the market has concentrated upward, with 56% of 2024 premium sales accounted for by participating whole life policies. The gap is most acute among younger Canadians, with Gen Z showing a 44% need gap, more than double that of Baby Boomers.
The data points to a consistent finding – the problem is not that Canadians reject the concept of life insurance, but that the buying process itself generates enough friction to prevent purchase. Research cited at the conference found that only 32% of Canadians trust their insurer, with complexity and affordability concerns driving non-purchase decisions more than a lack of perceived need. That is the specific problem both Manulife and PolicyMe are attempting to solve, from opposite ends of the market.
Allianz overtook AXA to claim first place in the 2026 Evident AI Index for Insurance, with AXA second and Manulife third. Zurich climbed eight positions to come fourth, Liberty Mutual fifth, and Intact Financial was the next Canadian name in the rankings.
The ranking reflects a deployment record rather than a roadmap - and nowhere is that more visible than in Canada, where Manulife's AI investment has translated directly into a transformed underwriting experience for advisers and applicants alike.
Phil Witherington, president and CEO of Manulife, said the results validate the company's commitment to operating as an AI-powered organisation globally, and that it expects to generate more than $1 billion in enterprise value from AI by 2027, with $300 million achieved as of year-end 2025.
The flagship Canadian deployment is MAUDE, the Manulife Automated Underwriting Decision Engine. Originally introduced in 2018 as Canada's first AI tool to make automatic underwriting decisions, it has since evolved substantially. By December 2025, 58% of eligible individual life insurance applications were being approved automatically, a 56% increase from pre-launch, with decisions in as little as two minutes and up to 40% fewer medical questions in the redesigned application. For the adviser channel, that means faster cycle times and fewer touchpoints; for the customer, it means a materially simpler experience at the moment they are most likely to abandon the process.
Evident co-founder and co-CEO Alexandra Mousavizadeh said Manulife has grown its AI talent pool by 41% year-on-year and is among a very small number of insurers globally to publish both realised and projected returns at the company level. Across the index, 29 of 30 insurers improved their AI maturity scores year-on-year, with a quarter of newly disclosed AI use cases showing evidence of agentic AI, up from one in 20 just six months earlier.
Where Manulife is applying AI to accelerate decisions within the existing product architecture, PolicyMe has redesigned the entry point entirely.
The platform became the first in Canada to evaluate every applicant across the full life insurance spectrum in a single real-time session, automatically routing each person to the best-priced coverage their profile supports.
Previously, applicants had to self-select a product category before knowing whether they would qualify, a structural flaw that has cost Canadian consumers significantly: those who choose a guaranteed issue policy when they could have qualified for fully underwritten coverage routinely pay up to five times more for the same dollar of protection.
The platform applies more than 1,000 reflexive underwriting rules, with most applicants answering around 30 questions. The same session simultaneously returns a decision on critical illness coverage across 44 conditions with no separate application required.
PolicyMe's own data shows roughly one in four applicants aged 51 and older who disclosed a pre-existing condition still qualified for fully underwritten coverage, directly challenging the assumption that health history forecloses standard coverage.
Andrew Ostro, CEO and co-founder, said: "Life insurance is one of the most consequential financial decisions Canadians make, and the industry has historically required them to make it before they have the information to do it well."
For applicants who do not qualify for fully underwritten or simplified issue coverage, PolicyMe and Securian Canada have built a new guaranteed issue permanent life product with no medical questions and coverage up to $100,000.
PolicyMe's research found that 13% of Canadians aged 55 and older said the prospect of a medical exam makes them less likely to purchase life insurance at all – for this group, guaranteed issue is not a fallback but the product that gets them covered. The company has placed more than $10 billion in coverage in Canada, and its white-labelled platform powers life and health and dental offerings for the seven million members of Canada's largest automobile association.
KPMG's 2025 Insurance CEO Outlook found that 73% of insurance CEOs now view AI as a top investment priority and expect meaningful returns within one to three years.
In Canada, that expectation is now being tested against a specific and documented challenge: a protection gap that widened even as aggregate coverage reached record levels, and that traditional distribution has proven structurally unable to close.
The week's announcements suggest the industry has concluded that technology is not a supplementary tool for the existing model, but a necessary replacement for parts of it.
