How commercial liability is trending in Canada

Recent attritional losses in Australia have put the Canadian commercial liability space in the spotlight, Aon says in its Spring 2025 Canadian Insurance Market Update report.

“Casualty claims trends in the public sector space show some concerning developments in certain geographies and recent attritional losses in Australia has put the Canadian space under scrutiny, with a continued narrowing of available capacity,” the report says.

Attritional losses in the public sector space refer to things such as slip-and-falls on public property, historical abuse claims, legacy litigation exposures, and mental health or employment liability claims.

In one recent case, the Australia government’s unlawful debt recovery program (known as Robodebt) to recover alleged overpayments of welfare benefits was deemed as “crude and cruel” in a report by the Royal Commission into the Robodebt Scheme.

It was “neither fair nor legal, and it made many people feel like criminals,” the commission said in its 2023 report. “In essence, people were traumatized on the off-chance they might owe money. It was a costly failure of public administration, in both human and economic terms.”

A class action lawsuit resulted in a $1.8 billion settlement in 2021 to repay unlawfully raised debts.

Attritional losses in Australia are also impacting insurers’ profitability, with local councils seeing increasing claims related to public liability such as trip-and-fall incidents on poorly maintained footpaths.

Canadian impact

Aon’s report does not specifically say why attritional losses in Australia have put the Canadian insurance space under scrutiny, but there is an interconnectedness to how global insurers and reinsurers assess risk and capital deployment across geographies. For example, significant losses in a region such as Australia could cause reinsurers to reassess where they deploy capital, which may result in tightened capacity in Canada, as the report found.

Although capacity for commercial liability risk is available in Canada, insurers continue to take a more cautious underwriting approach for the more challenging risk segments, the report says. Accounts in the higher-risk hazard segments may expect higher premiums, the report says. “Clients with comprehensive submission information and favourable loss history will fare better.”

Coverages generally remain stable, but exclusionary language for per-and-polyfluoroalkyl (PFAS, or ‘forever chemicals’), wildfire and eastern European exposures continues to be enforced, Aon says. “High-hazard accounts and those with significant losses are exempt from these industry trends and still encounter challenges.”

Generally speaking, the Canadian casualty market remains stable in 2025, with new and existing markets expanding limits, appetite, and solutions. While the primary casualty market is favourable for clients, the excess casualty market is seeing more aggressive competition, resulting in significant premium reductions and enhanced coverages for policyholders.

“This trend is consistent across most industries and business sectors,” Aon’s report says. “London markets have historically been the largest provider of mining casualty capacity.

“However, the domestic market is keen to support both international and domestic risks, contributing to an already competitive marketplace. While capacity is readily available, markets are still cautious about the amount of capacity they deploy and are not offering the large blocks that were common before the hard market.”