Where commercial insurance rates are heading

Commercial insurance rates fell 7% in Canada during 2026 Q2 after easing 6% during the first quarter, says the Canada-specific portion of Marsh’s Global Insurance Market Index.

Looking at sectors, property rates dipped for the ninth consecutive quarter – falling 8% in second quarter after a 6% decline in Q1. “Increased capacity and lower reinsurance costs contributed to high levels of competition across sectors and geographies,” the report notes, adding some larger accounts experienced double-digit rate declines. The report says numerous insurance companies broadened terms and relaxed competition.

“Risks with loss histories [are] viewed less favorably by insurers [and] less detailed submissions saw less favorable outcomes,” Marsh warned. Plus, “a major natural catastrophe that exceeds expectations could result in a tightening of capacity and a slowing of rate declines.”

On a positive note, the report says many property clients willingly reinvested their premium savings to reduce retentions or increase limits.

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Rates for casualty insurance slipped during second quarter, but the 4% decline was shallower than the 6% drop for all commercial lines. And the 2026 Q2 decline was shallower than the 5% dip casualty rates took in the first quarter of 2026.

“Clients with Canada-specific exposures seen as good risks by insurers typically benefited from favorable pricing,” Marsh notes. And “U.S.-exposed, loss-impacted, and more complex risks faced tighter capacity, higher attachments, and selective single- or double-digit rate increases.”

The report further points out the commercial auto segment “remained challenged,” under pressure from rising physical damage severity from parts, labor costs and theft, as well as higher auto liability costs stemming from litigation, larger settlements and claim complexity.

“Auto insurers offered more favorable conditions for best-in-class risks with strong loss ratios and well-documented controls, with close scrutiny of written policies, site inspections, and national safety profiles,” the report reads. “Some clients saw double-digit rate reductions.” And the report says some auto sector clients used savings from lower premiums to increase limits and lower retentions.  

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Continuing a trend that started in 2023 Q1, rates for financial and professional lines coverages slid 7% in 2026, compared with a 6% slide in first quarter.

“Directors and officers liability decreased by 6% on average,” Marsh’s report says, while pricing for employment practices liability (EPL) and fiduciary liability was unchanged.

“Rising health and welfare litigation and EPL claim activity have not, at this point, led to underwriting or pricing impacts, with terms remaining stable,” it adds.

The report also notes insurers made shifts toward more selective rate adjustments and that “underwriters remained watchful for exposures tied to cross-listed equities [which are stocks or other financial instruments trading simultaneously on more than one exchange, such as Nasdaq and the TSX] and private transactions [a process that converts a publicly traded company into a private company].”

Cyber rates fell 6% in 2026 Q2, following a 5% reduction in Q1. Marsh notes new market entrants are offering more capacity. “Coverage continued to expand, with fewer coinsurance requirements, broader sub-limited enhancements, and more frequent cybercrime sub-limits,” the report says.

“Insurers were generally more willing to offer lower retentions and coverage enhancements to insureds with stronger controls at no added cost, or premium reductions for the existing program.”