Canada’s insurance market is splitting in two — and the gap is growing

The numbers tell the story plainly. A year ago, Canadian businesses were absorbing commercial insurance renewal increases of 3.85% year-over-year. At the peak of the hard market in 2021 and 2022, that number was running between 8% and 9% — every year, for several years running. Today, it is 1.67%. Roughly one-fifth of what it was at the peak.

According to Applied Systems’ Applied Commercial Index for Q1 2026, released today, commercial renewal rates have fallen to their lowest level since 2019 — and to less than half of where they stood just 12 months ago.

“The 2026 Q1 results reflect a significant acceleration of the market softening we’ve been tracking over the past several quarters, with overall renewal rates dropping to 1.67% — less than half of what we saw in 2025 Q1,” said Steve Whitelaw, senior vice president and general manager of Applied Systems Canada.

For Canadian vehicle owners and homeowners, the picture is the inverse. Personal auto premiums are still rising at 11.1% year-over-year nationally, according to the Applied Rating Index for Q1 2026 released last month. The gap between what individuals and businesses are paying has widened to nearly 10 percentage points nationally.

Nowhere is that divide more stark than in Alberta. Personal auto premiums in the province surged 21.3% year-over-year in Q1 — more than 12 times the commercial renewal rate. That is a gap of nearly 20 percentage points, in the same province, in the same quarter. Alberta’s auto reform does not take effect until January 2027.

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The commercial softening has been broad. Hospitality, construction, real estate, and retail have all seen renewal rate increases fall sharply over the past year. The one exception: business and professional services, the rates of which ticked modestly higher quarter-over-quarter, although it remains well below levels a year ago.

On the personal side, the provincial divergence is equally pronounced. Quebec saw personal auto rise just 4% year-over-year — far below the national average. Alberta, as noted, sits at the other extreme. “Alberta continues to lead rate increases across both auto and property, while moderation is beginning to emerge in provinces like Quebec,” Whitelaw noted in the personal lines release.

For brokers, the data points to two distinct conversations. On the commercial side, Whitelaw said in the Q4 2025 commercial release that falling rates “provide brokers the opportunity to engage with their customers to consider expanding coverage options and future-proof their businesses.” On the personal lines side, the conversation is a different one — explaining sustained increases to clients already feeling the financial pressure, particularly in Alberta where relief remains more than a year away.

There is a notable footnote to today’s data. Applied Systems announced that this 2026 Q1 commercial report is the last of its kind. The company is pausing publication of the Canadian Commercial Lines Index as it “reimagines how it delivers insights and value” — ending a benchmark the industry has relied on to track the market cycle, at the very moment that cycle’s divergence is most pronounced.