Why size matters in Canada’s soft commercial market

When it comes to competition and the ongoing soft market cycle in Canada’s commercial lines, not all segments are created equally, Canadian insurers and brokers report.

Competition increases as you go from small and mid-market account sizes to the larger commercial accounts, as noted by both Intact Financial Corporation CEO Charles Brindamour and Marc Major, managing director and global placement leader for Marsh in Canada.

“In large accounts, there is ongoing pressure [on rates],” Brindamour reported in the company’s Q4 earnings call on Feb. 11. “And then, as you move from the smallest account to the largest account in the SME and mid-market space, competition is uneven as well. This is not a new phenomenon. This is something we’ve seen over the past decades…..

“We’re seeing that the competition in the SME and mid market space is highly uneven, but it’s nowhere near what we see in the large accounts.”

Intact has 70% of its commercial lines portfolio invested in the small and middle-market [SME] space, Brindamour said. And that’s not by accident.

“The nature of that [SME] business tends to be far more service-oriented, speed-oriented, and ease-of-doing-business-oriented, and, as a result, tends to be stickier,” Brindamour observed.

In contrast, elevated competition in the larger accounts means commercial buyers are motivated to shop around for a better price, making business retention more of a challenge.

In Canada, the magnitude of insurance rate increases across all commercial lines was down to 2.23% in 2025 Q4 from 5.02% in 2024 Q4, Applied Systems Canada reports in its 2025 Q4 Canadian Commercial Lines Premium Rate Index.

“Quarter over quarter, 2025 Q4 results showed average renewal rate increases were down across all lines of the most commonly placed commercial lines categories, including real estate property, business and professional services, construction, hospitality services, and retail services,” Applied says.

Brindamour notes Canadian commercial lines grew by about 1% in 2025 Q4, but the bigger change was about two to three points in the business mix. “That is the average size of account, not rates,” Brindamour says. “The average size of account is down a bit.”

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Brindamour reports Intact has tools to determine not just an advantageous change in account size, but also in profitability profile. Essentially, the strategy is not just to retain larger accounts to maintain top-line revenue growth, but it’s also to create an optimal business mix of profitable SME business segments.

“When you look at our performance, you get a sense that our risk selection strategy is working really well,” Brindamour says.

From the broker point of view, and commenting on the market generally, Major says he’s noticed larger commercial accounts are reinvesting premium savings back into their programs, which, in turn, puts pressure on insurers to offer their large commercial accounts better pricing and terms and conditions to retain the business.

“There’s lots of capacity there, and so [insurers with large commercial accounts] need to listen to the customer and provide the enhancements of coverage, definitely some pricing reductions, but likely not as much as you’d see in the middle market, the smaller business space,” Major tells Canadian Underwriter in an interview.

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“I would agree that in that [SME] area, there are a lot of differentiating factors, and probably different swings of what a consumer or an insured is getting in that smaller space, based on their own particular loss experience, their risk exposure changes, that have occurred over the past year.”

The pressure is on commercial insurers in Canada to differentiate risks, Major says, because there are more players currently offering capacity in the commercial space.

“With the capacity that’s coming in, and with an increased number of competitors and insurers — global insurers want to take advantage of the mature marketplace that exists here in Canada — insurers are going to sense pressure that they have to maintain [commercial] business,” Major says.

“They are going to be a lot more strategic and direct in their approach of how they’re going to write more business, because there’s just more people out there trying to do the same thing.”

David Gambrill

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