Will Canada’s construction insurance rates remain competitive?
While the construction market remains competitive in Canada, policyholders are seeing increased underwriting scrutiny and rate adjustments across several lines, according to WTW’s Global Construction Rate Trend Report.
Current market trends dominating the Canadian construction insurance sector include natural catastrophes, tariff uncertainty, skilled labour shortages, rising materials costs and the national housing crisis, the commercial insurer’s Q1 2025 report reads.
Despite headwinds, “the Canadian construction insurance market is still experiencing a competitive market with ample domestic capacity,” it says. “The casualty marketplace continues to be in a highly competitive environment including for wrap-up liability policies.”
Even with $8.9 billion in natural catastrophe losses tallied in 2024, the Canadian insurance marketplace has capacity for property as well as builders risk policies, WTW says. However, as a result, insurers are increasing deductibles, applying stricter underwriting scrutiny, particularly in high-risk areas, and introducing waiting periods on NatCat claims to manage exposure.
In North America at large, rates for high-hazard NatCat-exposed projects are expected to rise between 5% and 15%, while non-hazard builders’ risk (which covers risks related to the damage or loss to buildings and materials during the construction process) remains more stable with increases of up to 5%.
General liability rates are expected to range from flat to 8%, while auto liability premiums could increase by up to 10%, driven by higher claims costs and insurer concerns over fleet driver safety.
New tariffs levied by the United States and countered by Canada will undoubtedly impact imports and exports of construction materials, such as steel, lumber and equipment, and will exacerbate increases in their overall costs.
Plus, tariffs’ impacts on building materials and project costs could, by extension, drive up premiums. And consumers are expected to end up paying for the tariffs through higher home prices. “This uncertainty is affecting investment decisions and confidence in moving forward with projects,” WTW observes.
Despite these challenges, Canada’s housing crisis is fuelling strong demand for multifamily housing and affordable developments, keeping construction activity steady. In Alberta, for example, WTW notes a trend toward older shipping containers being repurposed for rapid housing construction.
“These innovative approaches are addressing the housing crisis by providing cost-effective and efficient solutions,” WTW says.
Wrap-up liability insurance — which removes the risk of coverage gaps or insufficient coverage limits across multiple policies — is seeing competitive rates (-5% to 5%) but residential builders may face higher excess insurance costs due to ongoing market caution.
Overall, rates are expected to increase in 2025 compared to 2024, with project-specific/controlled insurance programs for excess insurance seeing the highest predicted increases — up to 30% at the highest range, largely due to concerns around escalating claims and risk volatility.
Feature image by iStock.com/Brasil2
