How reinsurance rates, auto losses factored into industry’s 2025 results

Canada’s property and casualty (P&C) insurers posted strong underwriting performance in 2025, despite a massive rise in reinsurance expenses following 2024’s record Cat year.

And auto results remained weak but improved from the previous year, according to a 2025 year-in-review from the Property and Casualty Insurance Compensation Corporation’s (PACICC) latest quarterly Solvency Matters report.

In 2024, insurers paid out more than $9 billion in severe weather-related insured losses. Last year, insurers benefitted from a comparatively mild Canadian catastrophe season — about $7 billion less than 2025 at $2.4 billion.

“However, the industry did experience a sharp rise in Net Expenses from Reinsurance Contracts Held — which increased 593% in 2025, driving an unfavourable $6.9 billion swing between reinsurance premiums paid and claim recoveries — effectively mirroring the year-over-year catastrophe loss results,” writes Jeff Stewart, PACICC’s vice president of finance.

Still, the industry’s underwriting performance remained strong last year. Insurance Service Expenses declined by 4.1% and Insurance Revenues climbed 6.5%, together driving a $3.45 billion increase in the Net Insurance Service Result — up a substantial 29.9% year-over-year.

Stewart notes Canadian P&C insurers turned in a “standout performance” in 2025, delivering robust profitability and a return on equity (ROE) of 17.1%. “The result marks a notable step up from the 14.9% posted in 2024 and sits roughly 700 basis points above the industry’s 50-year long-run average,” he writes. “The results for 2025 mark the 6th consecutive year with ROEs above the long-run average.”

Auto results

When it comes to auto, 2025 underwriting performance in Canada’s private passenger auto insurance market remained notably weak. Last year, private passenger auto Net Comprehensive Combined Ratios (NCCRs) exceeded 100% in every province and territory except Quebec, Ontario and the Northwest Territories.

NCCR incorporates Insurance Service Expenses, Reinsurance Costs, General and Operating Expenses, as well as Net Insurance and Reinsurance Finance Expenses relative to Net Insurance Revenue. An NCCR above 100% means an underwriting loss and indicates the line of business is eroding the industry’s capital base.

“While the industry-wide result sits at 100.7% and has improved modestly by 2.8% compared to last year, these outcomes nonetheless underscore the persistence of an unsustainable trend,” Stewart writes.

The report doesn’t indicate what contributed to the unprofitability. But Insurance Bureau of Canada reported Thursday that despite a recent drop in auto thefts, claims remain historically high.

For example, over the last ten years, theft-related insurance claims increased by 38%. Over the same period, the value of theft claims increased by 169%, IBC says. Last year, the value of theft claims was $724 million, up from $269 million ten years ago.

Wildfire woes

For the industry, Canada’s second-worst fire season in 2025 also weighed heavily on personal property insurance results, particularly across Newfoundland and Labrador, Manitoba and Saskatchewan.

“Each of these provinces reported NCCRs above 100%, with underwriting performance deteriorating most sharply in Newfoundland and Labrador and Saskatchewan, where ratios climbed beyond 120%,” PACICC’s report says. “Beyond the wildfire-impacted regions, PEI and Nunavut also recorded unfavourable NCCRs for the year.”

Not surprisingly, commercial property and liability insurance remained the most profitable segments for Canada’s P&C insurers in 2025, with “highly positive” NCCRs of 89.3% and 87.9%, respectively. The line continues to see ample capacity and downward pressure on rates.

The only localized exceptions to NCCRs over 100% emerged in Newfoundland and Labrador in commercial property, and Yukon in both commercial property and commercial liability. “These isolated areas of underperformance stand out against an otherwise broadly favourable commercial underwriting environment,” PACICC says.

Looking at combined results by province, Newfoundland and Labrador stood out as the sole jurisdiction reporting an unfavourable result in 2025, with an NCCR of 106.8%. By contrast, Quebec, British Columbia, the Northwest Territories and Nunavut all delivered highly favourable outcomes, each posting NCCRs below 90%.

Underwriting profitability across PACICC’s 160 member insurers continues to vary. In 2025, approximately 9% of insurers reported negative Net Insurance Service Results.

“No single trend, however, appears to explain these outcomes,” Stewart writes. “Instead, weaker performance was driven by insurer-specific circumstances, often tied to unfavourable underwriting in select product lines or a high concentration of exposure within particular provinces.”