Canada P/C Insurance Sector: Resilience through Technology and Data

Canada's property and casualty (P/C) insurance sector demonstrates remarkable resilience, bolstered by robust capitalization, enhanced underwriting profitability, and steady investment returns, according to a recent AM Best report.

The report, titled "Canada Property/Casualty: Strong Earnings and Improved Underwriting Results Underpin Stable Outlook," underscores the critical role of technology and data analytics in maintaining the stability of the P/C segment. The sector's steady profitability in 2025 is attributed to improved underwriting results, primarily due to a decrease in catastrophic events compared to previous years. High fixed-income yields are contributory to consistent investment returns, even as interest rates have stabilized. However, future challenges loom with the rising frequency and intensity of climate-related disasters. Of particular concern is the personal auto insurance segment, which remains under pressure from higher vehicle repair costs and increased auto theft, despite signs of stabilization.

Technological Advancements and Regulatory Developments

Alan Murray, director at AM Best, highlighted the importance of agility and advanced risk management practices, urging the industry to leverage technological innovations such as artificial intelligence. Regulatory oversight in Canada remains strong, with the Office of the Superintendent of Financial Institutions (OSFI) emphasizing operational resilience, cybersecurity, and governance around AI usage. Provincial regulators are concurrently revising auto insurance policies to address emerging challenges.

The concentration of the market, dominated by a few large insurers, highlights the competitive advantages of size and strategic mergers. Geopolitical risks, wildfire threats, and the role of managing general agents and brokers in capital deployment remain pivotal concerns. The P/C industry's total insurance revenue grew by a significant 5.6% to CAD 97.4 billion on a gross basis and 6.0% to CAD 76.1 billion on a net basis in 2025, even as insurance service expenses declined by 6.3% to CAD 79.4 billion.

Key Figures from the AM Best Report

AM Best, a global credit rating agency specializing in the insurance sector, continues to offer insights into these developments. Their upcoming Insurance Market Briefing in Toronto will explore these findings, providing further context and implications for industry professionals.