Canada Insurance Market Rates

Property insurance rates decline

Property insurance rates declined 6%, reflecting an increasingly competitive market.

• Increased competition among insurers has led to improved terms for some clients, including notable increases in sub-limits and coverage enhancements.
• Key discussion points included tariff impacts, valuation methods, and wildfire risks.
• Financial implications of tariffs may impact industries such as automotive, steel, and aluminium, necessitating thorough examination of supply chain exposures.
• As an indication of market competitiveness, insureds exposed to significant natural catastrophes, with poor claims experience, or that presented engineering concerns also experienced rate reductions due to increased insurer competition.

Casualty rates continue to decline

Casualty insurance rates decreased 2%, the eighth consecutive quarter of declines.

• Complex risks, especially in heavy industrial and energy sectors, and those with significant US and transportation exposures, typically experienced rate increases.
• An influx of new managing general agents (MGAs) in domestic, London, and Bermuda markets added capacity, primarily in excess layers.
• Some insurers were reviewing portfolios and considering new sectors, including sectors previously overlooked.
• Increased financial pressures raised operational costs, potentially leading to higher consumer prices, reduced demand, and more liability claims.
• Exclusions for per- and polyfluoroalkyl substances (PFAS) were common. Insurers expect organizations with known exposures to show commitment to reducing usage and have a replacement plan. The issue is expanding beyond the US, with Canada proposing to declare most PFAS products as “toxic substances.”
• Wildfire coverage is evolving, and clients should not assume the availability of future coverage.
• Other exclusions and sub-limits varied by risk class and included climate change, wildfire, failure to supply (energy/utilities), mental anguish, concussion, sexual abuse, biometrics, human trafficking, and cyber risk.

Financial and professional lines rates decline

Financial and professional lines rates declined 3%.

• Some insurers withdrew directors and officers (D&O) liability capacity where they considered pricing inadequate. While some program layers experienced rate reductions, some insurers began to resist further decreases after three years of generally declining rates.
• Excess insurers were increasingly interested in moving down the tower structure.
• Fiduciary rates remained stable in the face of litigation regarding excessive fees and imprudent investment choices.
• Employment practices liability (EPL) rates and exposure remained stable.

Cyber rates decline, coverage expands

Cyber insurance rates decreased 3% as insurer competition and capacity remined strong.

• Clients took opportunities to enhance coverage, reduce retentions, and secure rate reductions.
• Rate reductions in excess layers in the 3% to 10% range drove program savings, with excess pricing significantly lower than underlying layers.
• Coverage options broadened, including the removal of coinsurance requirements and enhanced sub-limits; clients with improved cybersecurity were generally able to negotiate lower retentions.
• Claims frequency remained consistent and severity decreased.

Our rates reflect the segment mix of Marsh’s client portfolio.