AM Best has maintained its stable outlook on Canada's property and casualty insurance segment, citing strong capitalization, improved underwriting profitability and steady investment returns in 2025.
The report, "Canada Property/Casualty: Strong Earnings and Improved Underwriting Results Underpin Stable Outlook," credited a moderation in catastrophe activity relative to the prior year for the improved underwriting performance, alongside continued gains from technology and data analytics adoption across the sector.
Gross insurance revenue grew 5.6% to $97.4 billion in 2025, with net revenue up 6% to $76.1 billion, while insurance service expenses actually fell 6.3% to $79.4 billion. Steady investment returns came from elevated fixed-income yields even as interest rates largely stabilized.
"Sustaining profitability going forward will depend on the industry's ability to be agile and refine its risk management practices and leverage technological innovations, including artificial intelligence," said Alan Murray, AM Best's director.
This P&C outlook is a companion piece to AM Best's separate Canadian Life/Annuity report, both released as part of a slate of segment reports ahead of AM Best's Insurance Market Briefing in Toronto on September 23.
Read together, the two reports describe the same underlying dynamic from different angles: AM Best's life/annuity report found record new annualized premium in 2025 alongside widening coverage gaps tied to policies that haven't kept pace with inflation, while this P&C report finds improved underwriting profitability weighed down specifically by rising vehicle repair costs and elevated auto theft, even as theft shows early signs of moderating.
Across both of Canada's major insurance segments, AM Best's analysts are describing an industry posting genuinely strong headline financial results while still managing specific, persistent cost pressures underneath.
AM Best's framing of "moderation in catastrophe activity relative to the prior year" is accurate for 2025 specifically, but brokers should understand it in context: Insurance Business has extensively tracked 2026 as one of Canada's most active catastrophe years on record, with CatIQ describing at least eleven severe convective storm catastrophes declared since June alone, before the September 2 GTA hailstorm and the Bald Range wildfire's eventual $313 million insured loss estimate even happened.
AM Best's 2025 baseline year was comparatively calmer, which means this report's stable outlook is being set just before what could be a considerably more challenging 2026 catastrophe year flows through into next year's underwriting results.
AM Best's note that personal auto profitability remains under pressure but is "showing signs of moderating" lines up with a genuinely uneven national picture Insurance Business has covered in detail. Alberta's AIRB confirmed that incoming Care-First reforms are now projected to save drivers roughly 13.7% on average once filed rates take effect January 2027, addressing a market where insurers lost money on auto sales in nearly every year between 2013 and 2024.
Auto theft, meanwhile, has genuinely declined: Équité Association's own data found private passenger vehicle theft claims falling double digits into 2026, though theft-related costs still ran close to $900 million industry-wide last year. AM Best's national auto commentary is directionally accurate, but the improvement is concentrated in specific provinces and specific cost categories rather than spread evenly across the market.
The report's discussion of managing general agents and brokers playing an increasingly critical role in how insurers deploy capital and expand market reach is worth flagging as a live, observable trend rather than a forward-looking prediction.
For brokers, this report's core message is that the Canadian P&C market remains fundamentally healthy at the aggregate level, but healthy aggregate numbers can obscure real variation by province, line of business, and peril.
Auto insurance improvement is real but geographically concentrated around specific regulatory reforms; catastrophe moderation reflects 2025 specifically rather than a settled trend given how active 2026 has been; and continued market concentration among large national insurers, alongside growing MGA capacity, means the competitive landscape brokers navigate day to day is shifting even while the industry's overall financial position stays stable.
