Softening in Canada’s commercial lines persists

Rates in Canada’s commercial lines continue to soften, with rate increases in all major segments falling to half — or even less than half — of what they were two years ago, says Applied Canada’s 2025 Q2 Commercial Rate Index.

“This quarter’s average premium renewal rate change continues to decrease across the most commonly placed commercial lines of business, except hospitality services which saw a spike,” says Steve Whitelaw, senior vice president and general manager of Applied Systems in Canada. “As we make our way into the second [half] of the year, the Applied Commercial Index will shine light on how current macro trends such as U.S. tariffs and others will affect rates.”

This year, the overall magnitude of commercial insurance rate increases was down in all business lines relative to premium renewals during the same quarter last year. Commercial rate increases in all lines of business were 3.63% in 2025 Q2, down from 5.83% in 2024 Q2.

Quarter over quarter, rates in 2025 Q2 dropped in business and professional services, construction, and real estate property. But hospitality and retail services saw rate increases rise since the first quarter of this year.  

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Business and professional services, which saw rate increases of 7.42% during 2023 Q2, saw increases of only 3% in 2025 Q2.

A similar story happened in construction, where average premium rate increases of 7.24% in 2023 Q2 plummeted to 3.56% during the same quarter this year.

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In real estate property, again, rate increases were less than half of what they were two years ago. In 2023 Q2, rate increases in real estate property climbed to 6.87%. During the same time this year, those increases fell to 3.38%.

Premium renewal rates in both hospitality and retail services are down from what they were two years ago, although they have been trending upwards on a quarterly basis.

Hospitality rate increases peaked at 9.28% in 2023 Q2. They have since fallen to 4.53% in 2025 Q2. That’s up from 3.08% increases seen in the first quarter of this year.

As for retail services, carriers called for 8.31% rate increases during the second quarter two years ago. In 2025 Q2, they charged an average rate increase of 4.62%. That’s a slight uptick from the rate increase of 4.57% charged during the first quarter of this year.

Applied’s Commercial Index measures the premium difference year over year, based on an analysis of almost 22,000 data transactions per quarter.      

David Gambrill

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