The professional risk insurance market in Canada is deep into a soft cycle with no floor in near sight, and the signal that a turn is coming might show up in reinsurance before it shows up anywhere else, according to Oren Schemool (pictured), head of financial lines at HDI Global Specialty SE – Canada.
Schemool said the market has been highly competitive for roughly the past 12 months, with established markets opening more products and lines of business than they were writing two or three years ago.
"The number of competitors is increasing, definitely, with both new entrants as well as incumbents broadening their appetite," Schemool said.
The effect on pricing has been consistent. Renewal premiums across the industry are dropping in a standard range, he said, of minus 5% to minus 10% year over year. New business is another matter entirely.
"With new business, market participants are much more willing to be even more aggressive than they might have been on renewal business," he said. The aggression also scales with the size of the account. Above roughly $50,000 in annual premium, Schemool said, the market is being far more aggressive in trying to bind new business accounts than it is below that threshold, where the appetite cools noticeably.
Schemool was unequivocal about whether the market remains on that trajectory.
"The market has not bottomed out. I don't see it bottoming out in 2026, definitely not," he said. "I would anticipate that next year will probably experience similar conditions." The exceptions that could change that picture, he said, are adverse claims experience across the market, or a seismic event large enough to impact professional lines coverage specifically or the insurance industry overall.
Rather than guess at timing – a forecast he was careful not to make – Schemool pointed to where the first signs of a turn would actually appear: the reinsurance market.
"Reinsurance is sort of the canary in the coal mine," he said. In his experience, the signal is reinsurance treaties renewing with tighter terms, and an end to treaties being renewed with allowance for rate decreases. When those allowances stop appearing in treaty renewals, the soft market's foundation is starting to shift.
Quarterly publications on the reinsurance market offer a second read, he said, by tracking the financial capacity available to reinsurers. The logic runs in both directions: if financing opportunities flowing into the reinsurance market are increasing, rates will likely remain very competitive and continue to drop. When that capacity tightens, the pressure reverses and works its way down into primary pricing.
After reinsurance, the picture fills in closer to home. Schemool said he watches first-quarter results, how they correspond to individual renewal books, and the level of competition for new business as the next confirmations of where the cycle sits.
As for who is driving the competition, Schemool said many of the new entrants are London markets, or London offices of North American insurers. The pattern suggests two motives, in his reading: building market share in Canada, or applying expertise developed in London to tackle Canadian risks. What they are not competing on, he said, is the product itself.
"I have not seen in the market any policies that are providing dramatically different coverage than others," Schemool said. "There may be some tweaks here and there, but for the most part it's a fairly homogeneous coverage environment. So I think premium is really driving the market penetration that is being seen, by both new markets as well as incumbents going into other lines."
That premium-first competition is not spread evenly across professional lines, and Schemool traced how the softness transmits from one line to another. The pressure is strongest where cyber is involved. Technology E&O, a blend of E&O and cyber coverage, imports the rate environment of the cyber market, which he said remains far more competitive than the professional lines market – with cyber's rate pressures being transferred into tech E&O, though not to the same extent.
He offered an illustrative example: if the cyber market were running at minus 15% on rate, that pressure would translate to something like minus 10% in the tech E&O space – not as steep, but dragged lower than it would otherwise sit. Traditional professional lines coverages, such as architects and engineers or miscellaneous E&O, would then tend to land closer to minus 5%, maybe minus 7.5%.
The result is a soft market with an unusual shape: rates falling across the board, but falling fastest wherever cyber's gravity reaches, with new capital still arriving and coverage terms largely undifferentiated. Until reinsurance says otherwise, Schemool expects more of the same.
