Brokers report a segmented commercial property market

Canada’s property and casualty insurance industry is currently on pace to pay between $2 billion and $3 billion in NatCat claims thus far this year, fuelling a softening commercial property market. But segmentation in the commercial property market is becoming more pronounced, brokers tell Canadian Underwriter.

Consequently, brokers must be prepared to differentiate their clients’ risks to gain the benefits from the softening market conditions, an Aon report suggests.

“Properties which have robust risk management, are in preferred occupancy classes, and have minimal NatCat exposure are experiencing rate relief and enhanced coverage options,” Aon reports in its Fall 2025 Canadian Insurance Market Update, released today.

“In contrast, properties with adverse loss experience, non-standard construction, or significant exposure to natural perils continue to encounter elevated scrutiny and restrictive terms.

“The underwriting focus remains acute on key perils: severe convective storm (SCS), flood, wildfire, earthquake, and named windstorm, with many carriers re-calibrating sublimits, increasing deductibles, and extending waiting periods for NatCat-exposed placements.”

So far, Canadian P&C insurers have reported paying out $1.6 billion for natural catastrophe losses in 2025, putting the industry on pace for between $2.5 billion and $3 billion in NatCat losses for the entire year, if the current conditions hold.

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That’s much more in line with the $3-billion-plus they paid out in each of 2022 and 2023, as Aon’s report shows, and far less than the record $9-billion year they saw in 2024. Canada’s P&C insurance industry ended 2024 with a net insurance service ratio — an IFRS 17 metric akin to a combined ratio — of 86.1%, as opposed to 83.1% in 2023.

Given fewer NatCat losses this year, it stands to reason insurers would lower pricing for commercial property insurance, and Aon’s report confirms this is happening. Still, Aon’s report notes this isn’t a given: commercial property underwriters are more likely to offer more capacity and better terms to lower-risk commercial property clients.

“In the wake of substantial NatCat losses [in 2024], underwriting discipline remains strong,” Aon’s report states. “Insurers are placing greater emphasis on accurate valuations and comprehensive construction, occupancy, protection, and exposure (COPE) data.

“Rigorous evaluation of risk mitigation measures, including emergency response planning, and lightning protection, and vegetation management warranties, is now standard.”

Insurers at a brokers’ conference in B.C. earlier this year noted a significant number of properties damaged in the 2024 wildfires in Jasper, Alta., were underinsured. That has placed a premium on brokers making sure their clients are insured to value.

For this reason, brokers tell Canadian Underwriter, data-driven analytics are key in differentiating clients’ risks to underwriters.

“The 2024 Jasper wildfires have further underscored the necessity for pre- and post-loss strategies and the adoption of resilient building materials,” Aon’s report states. “Detailed risk engineering reports, third-party valuation appraisals, and well-documented mitigation plans have become critical differentiators in securing superior coverage and pricing.”

David Gambrill

David has twice served as Canadian Underwriter’s senior editor, both from 2005 to 2012, and again from 2017 to the present.