Canadian P&C Insurers Improve Underwriting Profits Amid Lower Natural Catastrophe Losses

Canadian property and casualty (P&C) insurers showed strengthened performance in the third quarter of 2025, with improved underwriting profitability driven by a notable decline in natural catastrophe losses compared to prior periods. The industry's gross insurance service ratio fell to 81.8%, marking its lowest level in seven quarters and reflecting robust profit margins, particularly in property insurance lines. Total insurance revenue reached C$17.64 billion, increasing 3% year-over-year and sequentially, supported by gains in automobile and property sectors. The third quarter contrasts with the previous year when multiple billion-dollar insured loss natural disasters significantly impacted loss ratios. Regional performance within Canada varied, with Ontario commanding nearly half of the market at C$8.57 billion in premium revenue and a 80% service ratio, improving substantially from last year. Alberta, making up about 19% of the market, saw dramatic underwriting ratio improvement but still reported an elevated 97.0% ratio due to regulatory constraints and recent historic wildfire and hailstorm claims. The province's automobile insurance segment remains challenged due to government-imposed rate caps and approval restrictions, causing persistently high loss ratios above 100% in recent quarters. Alberta's upcoming 2027 introduction of the "Care-First" system aims to reduce legal and claims-related costs. However, ongoing rate caps through 2026 are expected to hamper insurers' ability to align premiums fully with risk, sustaining pressure on profitability in the auto sector. Nationwide, automobile insurance remains a core contributor to the Canadian P&C market with C$7.63 billion in revenues and a gross insurance service ratio of 88.3%, showing progress from prior catastrophe-driven losses. Operational efficiency and strategic pricing emerge as key focuses amid inflation and supply chain challenges, despite some relief from the recent removal of U.S. counter-tariffs on auto parts. Market leaders Intact Financial Corp., Security National Insurance Co., and Co-operators General Insurance Co. demonstrated mixed profitability trends, with Intact showing sequential improvement due to effective price and supply chain management. Property insurance lines also showed strong financial results, underscored by Desjardins Group’s P&C segment which posted a C$331 million net surplus, doubling previous year earnings due to lower catastrophe costs. Premiums written grew in both auto and property sectors, reflecting market recovery. Despite improved overall catastrophe experience, recent wildfires in Manitoba and Saskatchewan causing nearly C$300 million in losses and a substantial Calgary hailstorm illustrate persistent regional risks for insurers. Continued advancements in risk selection, pricing strategies, and investment in technologies for disaster resilience remain priorities. Data and analysis are drawn from the Office of Superintendent of Financial Institutions (OSFI), excluding Quebec-regulated entities and public insurance corporations such as BC’s government auto insurer. The gross insurance service ratio used focuses on underwriting expenses relative to revenue before reinsurance effects, differing from combined ratios by excluding general operating costs. Canadian P&C insurers are navigating a complex landscape of regulatory environments, catastrophic volatility, inflationary pressures, and supply chain uncertainties. Market participants must adapt pricing and risk management frameworks carefully as Alberta’s regulatory reforms unfold and as regional catastrophe exposure fluctuates. The third-quarter results highlight the importance of integrating operational agility, regulatory compliance, and catastrophe preparedness in sustaining underwriting profitability and market stability in Canada’s P&C insurance sector.