As we approach 2026, business leaders are increasingly focused on understanding how artificial intelligence (AI) will influence their operations and how to leverage its benefits while managing associated risks. This is especially relevant for Canada’s property and casualty insurance industry, which must navigate this evolving landscape.

Canada as a country is fully embracing artificial intelligence, positioning itself as a leader in the AI race. In 2024, the government launched the Canadian Sovereign AI Compute Strategy, which aims to funnel $700 million into new or expanded data centers, up to $1 billion to build transformational public computing infrastructure, and up to $300 million to provide affordable access for small- and medium-sized businesses. In 2023, the country invested $2.57 billion into AI research and development, surpassing Germany and Japan in such funding.

This year, Canadian businesses are increasingly adopting AI, with 12.2% reporting active use — up from 6% in 2024. Use levels will no doubt increase next year.

Thirty-one percent of businesses that have operated for less than 10 years plan to implement AI within the next year, compared to just under 19% of older firms. This rapid digital transformation is reshaping operations across sectors. For insurance, it affects underwriting, claims and customer service, ultimately driving efficiency and cost reduction.

With innovation comes risk. The insurance industry is actively working to understand and quantify the risks associated with AI, but much remains uncertain. Historically, new technologies have introduced unforeseen challenges, and AI is no exception. Rapid adoption without thorough due diligence can amplify vulnerabilities, particularly in interconnected systems.

As businesses become more connected through AI, their exposure to cyber threats increases. The interconnected ecosystem requires rigorous security measures in all parts of the network — whether in data sharing, processing, or storage. The more integrated these systems are, the more potential points of failure emerge, risking data breaches and operational disruptions. Therefore, it’s crucial that AI-driven efficiency gains are matched with robust cybersecurity protocols.

The pressing question for the industry next year is whether speed or security will prevail in the AI race. The insurance sector is learning from past experiences, developing products and strategies that address emerging risks.

As AI becomes more pervasive in Canada, organizations will need to understand and mitigate new cyber risks. Partnering with insurance providers that offer access to industry experts and global resources can facilitate better decision-making and risk management.

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