Major credit agency’s views on Canada’s insurance market
Canada’s property and casualty (P&C) insurance market racked up solid financial performance during 2025 compared with the prior year, according to data from S&P Global Market Intelligence – a branch of credit ratings agency Standard and Poor’s.
Key drivers are lower natural catastrophe (NatCat) losses during 2025 following the more than $9 billion insured losses during 2024, which were driven in large part by a series of four storms during the summer of that year.
The Top 15 federally licensed insurers saw their combined ratio drop 4.6 percentage points to 92.4% in 2025, the report adds. The combined ratio (COR) is calculated by adding up incurred losses and operating expenses, and then dividing that number by earned premiums. A number below 100% indicates a profit, while above that number represents a loss.
The ratings agency says the industry’s COR reflects “materially stronger underwriting execution and reduced catastrophe activity,” and that the improvement was most noticeable in property lines, where insurance revenues climbed 7.4%, while expenses fell 14.6% thanks to a normalization of NatCat costs following 2025’s high.
Related: The hidden, truer cost of NatCats in Canada
“Among the 15 largest Canadian P&C insurers reporting to OSFI [Office of the Superintendent of Financial Institutions], insurance service revenue [which is based on the cost of services provided over a set period] increased by more than 6.5% while expenses declined by 1.9%,” says S&P. “However, structural challenges persist, particularly in Alberta’s auto insurance market where regulatory rate constraints continue to compress margins despite ongoing consolidation efforts across the industry.”
Specifically, it notes the 15 largest federally-licensed insurers who write in Alberta saw a 113.3% gross insurance ratio in 2025, compared to 87.4% in other provinces.
“Persistent rate constraints, including the extension of a 7.5% ‘good driver’ rate cap through 2026, have kept earned premium growth behind claims cost inflation driven by auto theft, weather-driven losses, and rising repair and medical severity,” S&P says.
Related: Insurers still coping with Alberta auto rate-cap consequences
Further, Canada’s largest OSFI-filing firms posted a gross insurance service ratio (which divides total insurance service expenses by total insurance revenue) of 68.8%.
S&P also notes insurer consolidation among larger players, including Definity Financial Corporation’s acquisition of Travelers’ Canadian business and Wawanesa Mutual Insurance’s more recent announcement that it will acquire Everest Insurance of Canada.
“These deals reflect carriers’ strategic view that inorganic growth, scale expansion, and technology leverage are essential paths to building systemic resilience.”
