The Canadian commercial insurance market is softening in 2025 and heading further in that direction through 2026, driven by a sharp drop in catastrophic losses, lower reinsurance costs, and growing insurer capacity. Canada's insured weather losses fell from $8.5 billion in 2024 to $2.4 billion in 2025, giving carriers more room to compete aggressively on price. In that environment, price alone stops being enough. Terryl Varghese, senior commercial underwriter at Unica Insurance, breaks down what is behind the shift, what brokers actually need from their carrier partners, and how underwriting clarity, speed, and specialization are separating the carriers that will thrive from those that will not.
Three converging forces are driving the soft market in Canada: a significant drop in catastrophic losses, lower reinsurance costs, and growing insurer capacity. Canada's insured weather losses fell from $8.5 billion in 2024 to $2.4 billion in 2025. Global reinsurance rate-on-line rates softened by approximately eight percent in 2025, and both domestic and foreign insurers are competing for Canadian risks, pushing rates down. Unica Insurance senior commercial underwriter Terryl Varghese notes that the combination of these three factors is creating a competitive environment where price differentiation is narrowing and service quality is becoming more important.
The 2024 catastrophe year was historically severe for Canada. The Insurance Bureau of Canada reported insured weather losses of around $8.5 billion, and catastrophe claims exceeded 273,000, surpassing the previous record of 197,000 set in 2016. Four individual events each generated losses exceeding $1 billion. Over the decade from 2016 to 2025, Canada's insured losses from catastrophic weather and wildfires reached approximately $37 billion, compared to $14 billion in the prior decade. The relative calm of 2025, with insured weather losses dropping to $2.4 billion, is what has given carriers the breathing room to soften rates and expand capacity.
Brokers are prioritising responsiveness above all else. A 2025 Insurance Business America survey of 1,200 insurance professionals rated responsiveness as the most important attribute in wholesale and carrier partners, scoring 4.81 out of five. Actual market performance came in at only 4.18, leaving a gap of 0.63, the largest discrepancy of any measured attribute. Beyond responsiveness, brokers want direct access to underwriters, fast quote turnaround, and genuine technical expertise. When rates are falling and multiple carriers are competing for the same risks, the quality and speed of the service experience becomes the primary reason a broker places business with one carrier over another.
Unica Insurance differentiates itself through underwriting clarity, consistency, and a specialized approach that goes beyond standard risk categories. According to senior commercial underwriter Terryl Varghese, Unica has expanded its commercial appetite in response to soft market conditions and adopted a more transparent, structured way of communicating that appetite to brokers. Clearer tools and guidance give brokers better visibility into target risks and lower-appetite areas, helping them place business with greater confidence. Rather than competing on price alone, Unica is positioning its ability to find solutions for non-standard risks as its primary competitive advantage.
When price is no longer a differentiator, the ability to find solutions for non-standard risks becomes a competitive advantage. Terryl Varghese of Unica Insurance explains that working directly with a broker to address risks outside the standard box lets brokers diversify their portfolio with the insurer rather than concentrating on one segment. It also allows carriers to offer competitive pricing for risks that fall outside other insurers' appetite, which strengthens long-term partnerships. In a soft market where every carrier is chasing the same standard risks, underwriting expertise on complex or niche placements becomes the attribute that separates leading carriers from the rest.
Commercial insurance has the highest customer retention rate of any industry at 86 percent, according to a 2025 First Page Sage analysis of more than 10,000 firms. That figure is driven primarily by high switching costs and established broker-carrier relationships. Terryl Varghese adds that retention comes down to service quality after the sale. In his words: 'While pricing plays a big role in winning the business, superior service is fundamental in retaining it.' Even in a soft market where competing carriers are offering lower rates, clients and brokers tend to stay with partners who have proven reliable over time.
Unica Insurance is focused on three pillars as the soft market extends through 2026 and into 2027: speed and ease of doing business through faster quote turnaround and data-driven insights; underwriting discipline that balances insurer and broker interests for greater consistency; and expanded commercial appetite communicated through clearer tools. Senior commercial underwriter Terryl Varghese says these priorities are shaping Unica's direction for the remainder of 2026 and beyond, with the goal of strengthening broker partnerships in an increasingly competitive environment. Founded in 1955 and now a subsidiary of Beneva Insurance Company, one of the largest property and casualty insurers in Canada, Unica distributes its products exclusively through professional insurance brokers across Ontario.
Terryl Varghese — Senior Commercial Property, Casualty and Fleet Underwriter, Unica Insurance. Spoke with Insurance Business Canada on market conditions driving the 2025–2026 soft market; provided commentary on broker expectations, underwriting strategy, and Unica's expanded commercial appetite.