Canada's life insurance sector has a persistent and well-documented protection gap: 42% of Canadians either lack life insurance or are unsure whether they have it, according to PolicyMe's 2025 Life Insurance Gap Report, a figure broadly consistent with LIMRA's Insurance Barometer Study finding that 57% of Canadians report having some form of coverage. Industry participants from Manulife, RGA and LIMRA, speaking at the 2025 Canadian Reinsurance Conference, have identified low consumer trust in insurers as a factor suppressing adoption alongside the more visible friction points - medical exams, long wait times and confusing product choices that cause applicants to abandon the purchase process partway through. AI-driven underwriting is the industry's current attempt to close that gap by removing the friction. Three distinct approaches are now active in the Canadian market, at different stages of development and with different theories of what the friction actually is.
Manulife introduced Canada's first automated underwriting decision engine - then called AIDA - in 2018, and has since rebranded and enhanced it as MAUDE, the Manulife Automated Underwriting Decision Engine. In January 2026 Manulife rolled out a redesigned electronic application alongside an upgraded MAUDE capable of automatic approvals in as little as two minutes for qualified applicants. By December 2025, 58% of eligible individual life applications were being approved automatically, up 56% from before the prior-generation launch. Manulife ranked first among life insurers globally in the 2026 Evident AI Index for Insurance, with underwriting and pricing the most common category of AI deployment among life insurers surveyed in that report.
BMO Insurance this week launched SmartDecision, an underwriting platform using advanced analytics and integrated predictive modelling to return decisions in as little as 14 seconds on eligible applications up to $5 million across its term life, universal life and whole life products, with no tele-interview or medical evidence requirement for qualifying applicants. The full electronic application takes an average of 20 minutes, against an industry average underwriting turnaround of upward of 28 business days. Applications that are rated or declined are still routed to human underwriters.
Katarina Nikolic, VP and chief corporate underwriter at BMO Insurance, said the insurer is comfortable issuing instant decisions at the $5 million limit based on its favourable actual-to-expected mortality ratios and its mortality slippage data - the comparison between outcomes of accelerated decisions and those that would have resulted from full underwriting. "We're fundamentally changing how underwriting is delivered," she said. "SmartDecision equips advisors with immediate, high-quality decisions and allows them to focus on what matters most - providing advice and building meaningful client relationships." BMO Insurance president and CEO Rohit Thomas described the launch as part of the insurer's broader commitment to advancing AI and digital capabilities across the business.
BMO is entering well behind Manulife's eight-year head start, but the $5 million instant-decision limit and the mortality slippage validation give SmartDecision its specific technical credibility rather than simply matching the competitive minimum.
Canadian insurtech PolicyMe, which has raised $51 million in funding and sold over $10 billion in life insurance coverage, is approaching the same problem from a different angle. Rather than accelerating the underwriting decision on a product the applicant has already chosen, PolicyMe became the first platform in the country to evaluate applicants across the full life insurance spectrum in a single real-time session, automatically routing each person to the best-priced coverage their profile actually supports. The problem it is solving is different from the incumbents' speed focus: applicants who select guaranteed-issue coverage without realising they could have qualified for fully underwritten policies have historically paid up to five times more than necessary for the same coverage.
The common thread across all three approaches is the attempt to close Canada's life insurance protection gap by removing friction. Whether these tools succeed in bringing more Canadians into fully underwritten coverage - rather than simply accelerating approvals for applicants who were always going to buy - is likely to be the measure regulators and analysts apply to this generation of underwriting technology as adoption widens across the market. Speed is the easiest metric to report. Penetration is the harder one to move.
