Canada’s commercial lines continue to soften

Canada’s commercial insurance rates continued to fall in 2025 Q1, decreasing in all lines by 3%, according to Marsh’s Global Insurance Market Index.

Commercial insurance rates in the country have seen steady decreases since 2024 Q1, the report notes.

Cyber rates in Canada saw the largest decrease, at 6%. And cyber coverage expanded, particularly for commercial clients who took steps to reduce their cyber risk.

“Clients used the competitive market to enhance coverage and reduce retentions, often resulting in flat premiums when improvements were made,” Marsh states in its report, which offered regional and line-by-line breakdowns.

In Canada, “lower excess layer rates contributed to overall program savings,” Marsh’s report says. “Reductions of 3% to 10% were common when primary layers renewed flat. Coverage expanded as coinsurance requirements were removed in many cases and sub-limited enhancements increased.”

Clients with improved cybersecurity controls were typically able to negotiate lower retentions, Marsh’s index says.

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Meanwhile, ample capacity in commercial property lines dropped rates by 3%, although reductions were more likely for accounts with fewer losses.

“Clients with risk profiles and loss histories viewed favourably by insurers experienced rate reductions up to double digits,” Marsh reports. “Those viewed less favourably saw minimal reductions.”

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Rates in Canada’s financial and professional lines also dropped by 3% in 2025 Q1.

“The directors and officers (D&O) liability insurance market was at an inflection point, with some capacity constriction outside Canada and Canadian insurers showing a stable appetite,” Marsh’s report says. “Employment practices liability (EPL) rates and exposure remained stable.”

In financial and professional lines, excess insurers were interested in dropping down on towers in some cases, Marsh notes. Some insurers sought new business in clients’ ancillary lines to diversify their portfolios, and prudence of investment choices emerged as a key underwriting theme.

Casualty insurance saw the lowest rate decrease in commercial lines, at 2%. This includes liability coverage for people and businesses responsible for damage to another person’s property.

Canadian casualty insurers were caught between a rock and a hard place in 2025 Q1. On the one hand, they sought rate increases for the rise in legal costs associated with “social inflation.” On the other, they were facing a competitive commercial rate environment, and didn’t want to lose market share by raising rates.  

“Insurers sought modest rate increases,” Marsh says. “However, they faced significant growth targets, necessitating a balance between achieving rate adequacy and retaining existing clients.”

But large, so-called “nuclear verdicts” — i.e. commercial auto liability claims of $30 million or more — continued to spook Canadian underwriters writing Canadian risks with U.S. exposures.

“Canadian clients with U.S. exposure typically experienced less favourable rates,” Marsh says. “The U.S. auto liability insurance market — to which many Canadian companies are exposed — experienced claims rising into umbrella and excess layers; non-owned auto and third-party hauling exposures received greater underwriting scrutiny.”

Marsh notes exclusions for “forever chemicals” — per- and polyfluoroalkyl substances (PFAS) — were “difficult to avoid.” Companies with known exposures had an easier time finding coverage if they showed a commitment to clear plans to reduce usage of these chemicals.

David Gambrill

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