How Canada’s P&C industry fared in Q3 under IFRS 17 key metrics

Canada’s property and casualty insurance industry showed improvements in key IFRS 17 metrics in 2025 Q3 compared to the same quarter a year ago, according to a new report from the Property and Casualty Insurance Compensation Corporation (PACICC).

The industry showed improvements in the Comprehensive Combined Ratio (CCR), Gross Insurance Service Ratio (GISR), Net Insurance Service Ratio (NISR) and Net Insurance Finance Expense Ratio. Softer reinsurance market conditions also showed up in the results.

In 2025 Q3, the industry average CCR was 94.4%, an improvement from 99% in 2024 Q3. Like the pre-IFRS 17 combined ratio, a CCR ratio above 100% indicates an underwriting loss and signals the industry is eroding its capital base. A ratio lower than 100% reflects a more profitable and efficient insurance operation. CCR measures total underwriting performance by expressing all related insurance service expenses, including claims, acquisition, and administrative costs as a percentage of insurance revenue.

“The Q3’25 CCR underscores a much-needed improvement in overall performance efficiency, with a mean and median favourable decrease of roughly five percentage points in comparison to Q3’24,” writes Jeff Stewart, PACICC’s vice president of finance. But “…the most concerning aspect is that, despite improvement from 50% of insurers reporting underwriting losses in Q3’24 to only 25% in Q3’25, this remains a significant proportion of the industry and an uncomfortably high proportion that warrants continued close monitoring.”

The industry’s GISR also improved. GISR shows the relationship between claims costs and expenses directly associated with insurance contracts, relative to insurance revenue. As with the CCR, a lower value indicates better insurance profitability performance, whereas a result exceeding 100% signifies an insurance service loss.

Nine per cent improvement

For 2025 Q3, the industry average GISR was 80.4% compared to 88.7% in 2024 Q3.

“Industry performance in Q3’25 reflects a median improvement of 9% year-over-year, surpassing the annualized industry average gain of 8.3 points,” Stewart writes. “This was driven by favourable underwriting trends, including increased revenue and reduced claims, likely due to a lower impact from catastrophe losses.”

Industry NISR results also show improvement, from an industry average of 90.3% in 2024 Q3 to 87.5% in 2025 Q3. “This improvement is driven by stronger gross insurance service results, partially offset by increased net reinsurance expenses (less claims recoverable to offset premiums ceded),” Stewart writes.

Net Insurance Finance Expense Ratio reflects the impact of financing expense activities (interest rate exposure and discounting of insurance liabilities) relative to insurance revenues. A higher ratio indicates finance expenses are negatively affecting profitability, often influenced by exposure to interest rates and market volatility.

In 2025 Q3, the industry average was 3.4% compared to 4.6% in the same period a year ago.

“The Q3’25 results reflect improved capital efficiency…,” Stewart writes. “This improvement is supported by a more stable interest rate environment, as well as reduced exposure to rate fluctuations and market volatility.”

On the reinsurance side, the quarterly results show a reduced reliance on reinsurance due to lower current-year Cat losses.

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The Reinsurance Impact Ratio indicates the net impact of reinsurance transactions (premiums paid and recoveries received) on insurance revenue. A value above zero means reinsurance premiums/costs outweigh claim recoveries. The average industry Reinsurance Impact Ratio increased from 1.6% in 2024 Q3 to 7.1% in 2025 Q3, the report notes.

Stewart says this likely reflects “consistent ceding of risk amid softer reinsurance market conditions, and reduced reinsurance recoveries following the elevated catastrophe activity in 2024.

“[There is] a reduced reliance on reinsurance in 2025 to stabilize results, driven by lower current-year catastrophe losses,” Stewart writes. “For context, 27% of insurers as of Q3’24 had year-to-date reinsurance recoveries exceeding premiums ceded, compared to just over 10% in 2025.”

Jason Contant

Jason has been an award-winning journalist with Canadian Underwriter for more than a decade, including the past three years as associate editor and, before that, as digital editor for seven years.