P&C industry’s Q3 profits up from last year, but are they sustainable?

What a difference a year makes.

Canada’s federally regulated property and casualty (P&C) insurers reported an overall net profit of $7.88 billion in the third quarter this year, up from $6.53 billion in 2024 Q3.

Driving that result was a $3.6-billion drop in Insurance Service Expenses between 2026 Q3 and the same time last year – from $56.59 billion to $52.96 billion.

After a year in which Canada’s P&C insurance industry paid out a record $9.1 billion in catastrophe claims in 2024, this year Cat claims are more within the range of “the early 2020s,” as Catastrophe Indices and Quantification Inc. (CatIQ) recently told Canadian Underwriter.

That would be somewhere between $1 billion and $3 billion.

And that’s reflected in the industry’s bottom line in 2025 Q3, according to the latest data from the Office of the Superintendent of Financial Institutions (OSFI).

Despite heated competition in commercial lines, in which brokers are reporting substantial rate reductions, the industry turned an $8.77-billion underwriting profit in this quarter. That’s a significant increase from the $6.53-billion underwriting profit reported this same time last year.

Net investment income stands at $3.13 billion in 2025 Q3, an uptick from $2.77 billion during the same time last year. It’s almost triple of where net investment income stood at this same point two years ago, in 2023 Q3, when the industry’s total net investment income was just $1.29 billion.

Many P&C execs have told CU that these profits may not be sustainable given the rate cuts happening in several commercial lines. And several observers have commented the rate cuts in some commercial lines do not correspond with the claims experience.

Renewal rates in all lines are still increasing, according to Applied System’s most recent commercial rate index. But the magnitude of the rate increases in several commercial lines is roughly half of what they were in 2023 Q2.

In the business and professional service lines — which includes professional liability and directors and officers insurance — rate increases in 2023 Q2 averaged 7.42%. In 2025 Q2, rate increases averaged just 3%.

“I would say the commercial market has softened after one of the hardest markets I’ve experienced during my career, starting in 2019 and lasting through COVID,” Insurance Brokers Association of Canada president Brett McGregor told a Canadian Underwriter webinar in November. “But it’s softening in a way that makes it challenging for brokers and consumers, because it’s softening in certain segments, and it’s softening in segments that got hit pretty hard during the hard market.

“So, after rolling out double-digit [rate] increases for three, four or five years, now suddenly we’ve got customers who are being offered 50% and 60% discounts from where they were the year before.

“That makes it challenging for brokers [and] it’s hard on the industry’s reputation when we’ve got big ups and downs like that.”