Quarterly Review | Winter 2026

Matthew Studley is chief operating officer at HUB’s Ontario and Atlantic regions where he oversees commercial lines and employee benefits portfolios. The U.S-based brokerage is one of the largest in Canada. With approximately 1,000 employees the broker operation manages commercial insurance and complex risk management for businesses spanning small to medium sized companies to publicly traded multi-national firms.

Studley said commercial speciality has been hit hardest by soft rates, a trend HUB started seeing especially in directors and officers (D&O) insurance in the fall of 2023. Cyber is also soft and, barring natural catastrophe risk exposure, so is commercial property. Errors and omissions insurance is more stable but not a flat.

“We were coming off hard D&O through Covid and the whip in pricing was extreme,” Studley said. “And that line has not left soft—it has just gotten worse.”

He noted that some capacity withdrew from the Canadian market in response to the uncertainty of the pandemic. In the early 2020s it was reported that there was a “churn” of Lloyd’s of London syndicates in Canada, some were reducing capacity while others filled gaps . Studley described this as a pandemic-related exit and when extreme losses didn’t happen, an influx of capacity came rushing back in.

And policyholders are left scratching their heads. In the hard market rates were increasing by 40 per cent and by 2023 they were reducing by up to 30 per cent, he adds.

“The new capacity has massively driven back into the Canadian market and seeing huge price decreases—it’s difficult to interpret other than [markets exiting previously] as an explanation,” Studley said.

An abundance of reinsurance capacity could also sustain buyer-friendly conditions in commercial property insurance.

Marcos Alvarez, managing director of global financial institutions at rating agency DBRS Morningstar, attributes the soft commercial property market to increased reinsurance capacity. This is a global phenomenon and not unique to Canada.

There is caution though because of natural catastrophe exposures in Canada and underwriting is selective.

“During the pandemic companies were profitable and were able to manage rate increases,” Alvarez said. “So far 2025 has been okay from a natural catastrophe perspective but 2024 was a record year from a loss perspective so insurers are being selective for water, flood and wildfire risks.”

He said even in this soft market Canadian insurers rated by DBRS are performing well and that Canada is a good place for the insurance business, especially in casualty, cyber and financial lines. And in the absence of major events in 2026, that story is expected to continue.

“We are seeing good combined ratios in the Canadian P&C industry and that tells me that underwriting is still very disciplined which is good from a credit perspective,” Alvarez said. “We are seeing that insurers are able to sustain below 100 combined ratios even in a soft market and so far we haven’t seen spikes in combined ratios—even in 2024 which was such a loss heavy year.”

Paul Croft is chief operating officer at Aon Canada. Aon is a publicly-traded global professional services firm with a brokerage portfolio focused on insurance and reinsurance. He is a veteran insurance executive and has seen a few hard-to-soft cycles throughout his nearly four decade career.

He said, in a way, this soft cycle was predictable. After any black swan event — like the pandemic or the 9/11 terrorist attacks — the insurance industry can swing quickly from a soft to a hard one as insurers pull back in search of stability. In turn, that reduction in capacity sets the stage for the market to soften again.

He said Aon Canada is seeing volatility especially in cyber insurance, increasing competition in D&O where products are less “off the shelf”, and general liability is also soft. And as long as there is sustained profitability, the softer prices will stay.

“Canadian insurers are still in good standing,” Croft said. “Interest rates are impacting returns but loss ratios are still good.”

The big picture view shows insurers performing well in the soft market. But, on the ground, brokers and insurers are working hard to retain business, highlighting how challenging the market is despite strong ratings and favourable combined ratios.

Josiane Berube is Quebec regional manager at Wynward Insurance Group. She manages a team of six people in Quebec writing P&C commercial insurance. In her 15 years in the insurance industry, she said this is the first time she’s facing such a challenging market where a 10 per cent rate reduction is at the lower end.

“The question we are asking is ‘are we fighting to retain or are we letting go of a book of business—is this worth it to us?’” Berube said. “Because we can’t go lower than our benchmarks [we] could be losing out on business because we can’t take it on the price other companies may be offering.”

Wynward underwrites a lot of specialty insurance in manufacturing, grain and feed mills, and contractor and construction. Berube said she has noticed insurers that weren’t underwriting those risks before are now. This allows for customers who once split their insurance programs across multiple companies to consolidate entirely with one insurer, adding to the competition.

She said brokers she works with are facing intense pressures as well because of their commission-based models. Another trend she’s noticed is brokers grouping multiple, similar policies. For example, multiple insureds could be in one group, and brokers negotiate a price for them all. This makes it harder for other brokers to access those policyholders but riskier for insurers to underwrite.

“It’s really an insured’s world right now,” Berube said. “As an insurer, at least I’m not affected in terms of commission from an account of a client that goes elsewhere. Brokers are working three times more for a file, but they are losing salary because the account is bringing less money. For them it's a direct salary impact.”

Studley at HUB echoes Berube’s observations in terms of how challenging the market is right now: “Brokers are really gunning for any new business.”

Both say the soft market is impacting the industry across Canada, but province-to-province the precise challenges could differ.

“I would say the softening is national but I see Toronto and Ontario, and Atlantic Canada more and it’s my opinion that if the soft market started there it will probably end there too,” Studley said. “But because Ontario is such a big piece of the Canadian economy, and the biggest opportunity for insurers to grow and retain business, maybe it’ll get even worse.”

There are other pressures on the insurance industry besides pricing that may be different from previous soft cycles—shifting and sometimes unpredictable macroeconomic factors.

Alvarez said that interest rate change impact on insurers’ investment returns are calculated into ratings but the U.S. tariffs are not.

“There is volatility from the U.S. and varying signals, and the Canadian economy overall hasn’t seen the full effect—it’s still kind of ‘business as usual,’” he said. “And it’s across financial institutions, so there might be a lagged effect.

He added: “For insurers this might be bad because of the increase in prices of parts and materials in auto and some insurers are needing an increase in rates in those lines. For interest rates we see a clear direction, but the tariffs are still more of a question mark.”

Berube said that the uncertainty of the tariffs are adding to policyholders’ feeling of uncertainty. Not only are there swings in price and product availability because of the soft market, uncertainty created by tariff changes created panic when Canadians started hearing about the changes.

“Brokers were coming to us and insureds didn’t want to sell to the U.S., there were disruptions and claims because goods were stuck at the border, shipments were late or goods couldn’t be shipped, so we had to show flexibility,” Berube said. “We hear about it less now but people were panicking for a while because they didn’t know how to manage these things. We still need more proof about how it’s directly impacting the market.”

Croft acknowledged that economic instability is present, driven by factors ranging from inflation and interest rates to supply chain disruptions, geopolitics, tariffs and global conflict. He also noted that Canada is potentially expanding trade with India, which is another geopolitical question mark that could affect the industry. Despite this instability insurers are still making money.

“This volatility lurks in the background and no one knows what it could do or create going forward,” Croft said.

Studley said the effectiveness of explaining price differences and how different economic factors can impact the insurance industry and pricing depends largely on the buyer’s role within the company.

He said HUB’s insurance buyer ranges from chief financial officer and vice president of finance to general counsel or general manager. And the more general the role, the less time that person has to dedicate to one part of the business, like finance. Also, depending on the line of business and sector for which the policyholder is buying insurance, they are going to react differently to price changes.

And changes can happen so fast that it can catch buyers off guard.

“There are certain sectors like financial services, that understand the nuances,” Studley said. “Small to medium size businesses aren’t as in touch with the monthly impact of price differences, or their understanding of insurance. They just don’t need to know in the same way.”

He added that the approach to managing reputation risk due to changing rates in a highly competitive market depends on these different factors.

Croft said selling retail products, like homeowners and personal auto insurance, it is more common to talk to customers who understandably don’t know much about market cycles or how macroeconomic trends can impact insurance.

“In commercial business we see less of that because buyers are more financially educated, are using analytics to understand the pricing they are looking for and see it more as an opportunity to optimize their insurance programs and expand coverage limits,” he said.

Studley said in this market the value of the broker and insurer is firmly in the eyes of the customer. While core operations like claims and long standing relationships with policyholders are still extremely valuable, some customers ultimately might shop around more for a better price.

And this dynamic exacerbates an already dire need for talent on the broker side, he said.

“If you work on commission and you have to do triple the work for 80 per cent of the money that is a huge imbalance and causes strain on staff and relationships with insurers especially for brokers and insurers who didn’t catch on to the soft market fast enough,” Studley said.

He said strained staff could cause problems down the line. In a difficult market—when the industry needs well-trained professionals the most—investments in training, career and talent development are lower. And lagging performance could trigger downstream effects on the industry and the quality of policyholders’ insurance coverage.

“When people are hunting for growth and are under financial pressures, lack of expertise becomes a bigger problem in smaller to mid-sized brokerages,” Studley said. “And this lack of expertise could lead to worse coverage. The customer might be getting cheaper coverage but does the customer really understand what has been changed to save that money?”

He said he doesn’t attribute this to bad-faith actors but fewer staff who have the layers of expertise needed for certain sectors and products.

“When you don’t know, you don’t know what to advise on,” Studley said. “That’s why policyholders hire us as advisors, but working in today’s market could cause a huge reputational problem if an insurer rightfully denies a claim.”

Leaning on data and analytics, and new industry recruits’ native knowledge of artificial intelligence (AI) is a boon under the pressures of the soft market.

Croft said it’s key to lean on available data and tools to maintain strict underwriting in a soft market.

“Compared to previous soft markets, we are seeing more use of data and analytics—we have a lot more data than we had in the past,” Croft said. “With enhanced analytics we can price in a pinpointed way and look at where exposures are. Especially with analytics tools with artificial intelligence we can enhance how brokers see customers’ risks and talk to carriers in an educated way.”

This is where leaning on the new generation of insurance professionals could be beneficial as they tend to be digital natives, especially in using artificial intelligence.

Studley said that regardless of how more experienced employees feel about a younger ones, getting new people into the insurance industry is imperative.

“There are groups of newer generations that understand our business and are hard working and we have to do what we can to support them and give them technical training and opportunities for advancement,” he said. “People can say what they want about younger workers but our competitors won’t wait to recruit and will make calculated bets on who can progress and how to balance developing their soft skills and technical knowledge.”

Berube said the soft skills are crucial in a market like this. In a relationship driven industry like insurance, few things replace picking up the phone and calling a broker. This is something she has seen younger employees struggle with and said there is a gap between younger and older generations in terms of how they get their work done.

“Accounts where we don’t have a relationship, it’s affecting the business very fast.,” Berube said. “It’s been a hard year, and many younger workers haven’t seen a soft market before. This is triggering the need for a lot of soft skills that the younger generation doesn’t always have, like negotiating, managing the professional pressure, and how to speak with brokers; the industry needs much more than just strong technical skills right now.”

Studley said he is hopeful about the new generation of workers that are entering the insurance industry. So hopeful that he said we need even more of them. And crucially, their native technology skills could be useful in this soft market.

“Do they need to learn how we are doing things, or is that just easier for us?” he said. “For people coming into industry now, if we can train their technical insurance skills fast, they can close a gap as AI tools grow.”

The only consensus as to when this soft market struggle will abate is that it’s unclear.

What seems to be different now compared to the last soft market is that cycle lengths seem to be changing, said Alvarez at DBRS Morningstar.

“We typically have a soft market for four to five years then a hard market for two years,” he said. “Now we are seeing that the last hard market lasted five years, so maybe this soft market will be shorter than the one before. The hard market used to typically be two to three years and the last one was longer. We could see a reversal of the durations.”

Croft said whatever ends up happening in terms of how long this soft market lasts, this is the time for insurers, brokers and policyholders to optimize their portfolios for when the shift to a hard market happens. In particular for highly educated consumers of commercial products, the time is now to create more resilient insurance programs.

“We don’t know what is around the corner, no one can predict cycles and we don’t know the next thing coming that will affect the world,” he said. “For now, as long as underwriters maintain good performance and there are no black swan events, the soft market can be expected to stay.”