Canada’s commercial lines rates almost half of what they were two years ago

Most commercial lines renewal rates are about half of what they were at this same time two years ago, new figures from the 2025 Q2 Applied Commercial Index show.

“We are seeing a continued softening of the market across all commercial lines of business, both compared to Q3 last year and Q2 this year,” says Steve Whitelaw, senior vice president and general manager of Canada for Applied Systems.

Renewal rates in all lines are still increasing, the data show. But the magnitude of the rate increases in several commercial lines is roughly half of what they were in 2023 Q2.

For example, in the business and professional service lines — which includes professional liability and directors and officers (D&O) insurance — rate increases in 2023 Q2 averaged 7.42%. In 2025 Q2, rate increases averaged just 3%.

The same thing is happening in almost all major commercial lines in Canada, Applied’s data show. The following commercial lines have seen significant rate softening over the past two years:

Even in just one year, rate increases in most commercial lines have dropped precipitously since the same time last year.

In business and professional service lines, for example, average rate increases have dropped 99.7% since 2024 Q2 — from 5.99% to 3%.

Rate increases in construction lines in 2025 Q2 slipped 50% over the same time last year, from increases of 5.34% last year to 3.56% this year.

In real estate property, rate increases fell by 74.9% in just one year, from 5.91% in 2024 Q2 to 3.38% in 2025 Q2.     

And in retail services, rates have dropped by 60.2% over the past year — from 7.4% in 2024 Q2 to 4.62%.

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The only line where insurers have more or less held firm is hospitality, where average rate increases dropped by ‘only’ 29.8%, from 5.88% in 2024 Q2 to 4.5% in 2025 Q2.

Needless to say, brokers have noticed. And some have told CU in private that they are concerned about having to explain how rates have dropped so quickly since the pandemic.

Insurers have explained to CU that since the commercial market hard cycle during COVID, several new insurers entered the market, seeing that rates were commensurate with the claims experience. Seeing an opportunity to profit in the hard market, they added additional capacity into the market.

David Gambrill

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