2026 Canadian Commercial Insurance Market Outlook: Rates, Capacity & Coverage Trends

Canadian businesses can expect a much-needed breather on insurance costs in 2026. After several hard-market years of rising premiums, the commercial property & casualty (P&C) insurance landscape in Canada is broadly stabilizing – even softening – as we enter 2026. Rates for many coverages are leveling off or declining, capacity (available insurance capital) is abundant in most segments, and product scope is evolving with insurers both expanding coverage in competitive lines and tightening it in challenging areas. These shifts come as Canada’s market is increasingly influenced by global trends, from climate-driven catastrophes to international insurance capital flows.

For business leaders – whether you’re a President, CEO, CFO, Controller, Founder or Owner – these developments impact the cost of your insurance across liability, property, auto, and specialty policies. Below, we break down the current state and 2026 projections for Canadian commercial insurance in three key areas: rates, capacity, and product scope, and explain why these trends matter for businesses of all sizes.

Rates Outlook for 2026: A Softer Market (with Some Hard Edges)

Commercial insurance rates in Canada are trending downward or holding steady heading into 2026, a welcome change after the hard market of recent years. Improved insurer results in 2024, higher investment income, and increased competition have combined to halt the steep premium hikes that many businesses experienced from 2018–2022. According to the Insurance Bureau of Canada, rates declined across all major commercial lines in 2024 and continued to drop in 2025, signaling a broad-based softening.

However, this relief is not uniform. The degree of rate change in 2026 will vary by coverage line and risk profile:

• Liability (Casualty) Insurance: After several hard-market years, general liability and umbrella/excess liability premiums have leveled off. Many businesses are seeing flat renewals or even slight rate reductions (on the order of 1–5%) as insurers seek growth and market share. For instance, liability rates were roughly flat to 2% down in early 2025. This stabilization comes as carriers finally consider their liability rate levels adequate after past increases. They face a dilemma: claims costs (especially legal costs from “social inflation”) continue to rise, yet competitive pressures prevent significant hikes. The outcome for 2026 is likely continued stable-to-slightly-declining liability premiums for well-managed accounts. (Notably, companies with U.S. exposures remain an exception – they often face higher liability pricing due to the threat of outsized U.S. jury awards (“nuclear verdicts”) impacting policies.)
• Property Insurance: Property insurance rates in Canada are moderating after a period of significant increases in 2019–2022. In fact, average commercial property premiums dipped by ~3% in Q1 2025, and many claims-free, well-protected properties obtained double-digit rate cuts. The driver is a surge of capacity and competition in property lines – even catastrophe-exposed accounts saw insurers easing off price increases in late 2024. That said, property remains a cautious segment. Why? Extreme weather events in Canada have reached record levels – 2024 saw an unprecedented C$8+ billion in insured catastrophe losses – and inflation in construction costs (materials and labor) continues to elevate rebuilding expenses. These factors squeeze insurer profitability and keep underwriters vigilant. Businesses in hazard-prone regions or with recent losses should expect closer scrutiny: insurers may not cut rates as readily for these accounts, and could impose higher deductibles for perils like wildfire or hail. Barring major global catastrophes, the consensus is that property insurance pricing will remain competitive into 2026 – but any surprise severe loss activity (e.g. a catastrophic U.S. hurricane season on top of Canadian losses) could swiftly reverse the softening trend. Overall, look for most property policy renewals in 2026 to come in flat or modestly down, especially for clients who invest in risk improvements and have favorable loss records.
• Automobile (Fleet) Insurance: Commercial auto insurance remains a notable hard-market holdout in 2025 and likely into 2026. Unlike other lines benefiting from improved conditions, auto underwriters in Canada face persistent cost pressures. A few driving factors: an epidemic of vehicle theft (especially in Western Canada), surging repair costs for modern vehicles, and in Alberta, an ongoing market disruption. Alberta’s combination of government rate caps and rising claims costs created an unsustainable situation – insurers have been paying out $1.17 in claims for every $1.00 in premium on auto policies. As a result, several insurers have exited the Alberta auto market altogether, reducing competition. This means higher rates and fewer choices for businesses insuring vehicles in Alberta, and it influences the overall commercial auto segment. Across Canada, commercial auto premium rates were still increasing through 2024 (though the pace of increase had started to soften for best-in-class fleets by late 2024). In 2026, companies should plan for elevated auto insurance costs, especially if they’ve had claims or operate in theft-prone regions. We anticipate mid-to-high single-digit percentage increases for many auto fleets, with only well-controlled risks (low claims, robust driver safety programs) managing flat renewals. Mitigating actions like installing telematics and anti-theft devices can help moderate these costs – and indeed are increasingly encouraged by insurers to improve insurability.
• Specialty Lines: The specialty insurance arena – which includes coverages like cyber liability, directors & officers (D&O), professional liability, marine, trade credit, and others – presents a mixed picture going into 2026. Some specialty lines that saw dramatic rate spikes in the past few years are now firmly on a downward swing. A prime example is cyber insurance, where massive losses in 2019-2020 triggered hard-market conditions. By 2024, as cyber insurers imposed stricter security requirements and saw improved results, the market became competitive: Canadian cyber rates fell an average 6% in early 2025, and insurers even expanded cyber coverage (higher limits, broader terms) for clients with strong cybersecurity. Similarly, the D&O liability market in Canada has rebounded from its crunch – ample capacity and fewer claims have led to multi-year premium decreases (about 3% down in early 2025), and generous terms for many public companies as insurers vie for business. We expect cyber, D&O, and other financial lines to remain buyer-friendly in 2026, with flat or lower premiums, unless a surge in claims (or a wave of M&A activity in the case of D&O) swings the pendulum. Other specialty segments, however, are seeing increases or tighter conditions depending on their risk environment. For example, commercial crime insurance and trade credit insurance could face upward rate pressure if economic conditions worsen – rising insolvency rates would strain trade credit insurers, and trade credit as an area to watch due to creeping defaults. Environmental liability is another niche where insurers are raising alarm: new exclusions for “forever chemicals” (PFAS) are becoming standard, and companies with pollution exposures might pay more for coverage or struggle to obtain it. Additionally, certain global events have driven up costs in specific lines – for instance, the war in Ukraine led to specialty aviation insurers raising rates on risks like aircraft hull war coverage. In short, specialty insurance pricing in 2026 will vary significantly by product: many buyers will enjoy stable or dropping premiums in lines like cyber, D&O, EPL (employment practices liability), etc., but businesses in higher-risk or emerging risk classes should be prepared for potential rate hikes.

Bottom Line on Rates: For most Canadian businesses, the cost of core commercial insurance in 2026 is expected to be on par with or lower than last year’s. Declining rates in liability, property, and many specialty lines are offering relief and even opportunities to enhance coverage for the same spend. Yet, pockets of hard market conditions persist – notably in anything auto-related and certain specialized risks. Companies should not be complacent: your individual results will depend on your loss history and risk profile. Insurers are differentiating between well-managed risks and challenging ones more than ever. Thus, businesses that invest in risk management, maintain good loss records, and present themselves favorably to underwriters will reap the biggest benefits of the softening market (often seeing the biggest premium drops), whereas those with higher risk may still face increases or coverage restrictions despite overall market trends.

Capacity in 2026: Abundant Incoming Capital vs. Selective Retreats

Capacity – the supply of insurance and the willingness of insurers to underwrite risks – has surged in most of Canada’s P&C market, turning the tables in favor of insurance buyers. Over the past 18-24 months, Canada has seen a steady stream of new insurers and capital entering the market, drawn by improving profitability in 2023-24. This influx has transformed what was a tight capacity situation into one where insurers are competing to deploy their capital. The direct effect is greater negotiating power for clients: more carriers are available to quote your insurance program, and insurers are writing larger policy limits.

Key highlights of the capacity outlook:

• New Entrants & Expansion: In 2024-25, multiple international insurers and even alternative capital providers (like insurance-linked securities) increased their presence in Canada. As international capital seeks new and diversified returns has a resulted in new entrants and new capacity entering the Canadian market, creating today’s soft market environment. Established carriers also expanded their capacity deployment; for example, property insurers that had been cutting back in 2021-22 began increasing their line sizes and capital allocations for Canadian risks in 2024. The result by late 2025 is that many insurance programs (especially in property and excess liability) became oversubscribed – there are more insurers willing to take a share of the risk than needed, which leads each to accept smaller portions at lower prices. In umbrella/excess liability, new competition emerged and pushed pricing down as well. All of this bodes well for 2026, as capacity is plentiful in most lines, giving brokers leverage to secure better terms for clients.
• Where Capacity is Plentiful: General liability and property insurance have ample capacity in Canada as we head into 2026. Dozens of insurers are actively pursuing these lines, and even previously hard-to-place sectors (say, manufacturing or multifamily real estate) are seeing more underwriters willing to consider them. Financial lines (like D&O, professional liability) also report abundant capacity – insurers that once exited these markets during the tough times have returned. Cyber insurance capacity has grown after the market course-corrected; many insurers are cautiously re-entering with improved underwriting standards. Essentially, in these mainstream and financial segments, supply outweighs demand, which is why we observe broad softening.
• Global Capital & Reinsurance Influences: Canada’s capacity is closely tied to global insurance capital flows. In a year with benign global catastrophe losses, international reinsurers and insurers have excess capital, and they often channel more of it into markets like Canada that promise growth. Indeed, part of Canada’s 2025 softening was because the U.S. and Europe had relatively light catastrophe years, leaving global reinsurers financially strong. However, this can pivot quickly. If 2026 brings heavy insured losses globally (e.g. a severe U.S. hurricane or European windstorm season), that could diminish global capacity and prompt insurers to pull back in all markets, including Canada. Additionally, global reinsurance terms tightened in recent years after big 2022 losses, which raised costs for primary insurers especially on catastrophe risks. In 2024 those costs were manageable, but they remain a pressure point on capacity for property risks with high catastrophe exposure – some insurers rely on pricey reinsurance capacity to underwrite Canadian wildfire/flood zones, so they limit how much they’ll offer in those areas. In summary, 2026 begins with a capacity surplus, but global events (major disasters, economic shocks) are the wildcards that could change that equation.
• Pockets of Tight Capacity: Despite the rosy overall picture, certain niches continue to experience capacity constraints:
  • In personal & commercial auto, especially in Alberta, the pool of willing insurers has shrunk as noted. With some insurers withdrawing, those remaining are selectively writing business, often only for the best risks. This means fleets with poor loss records or certain vehicle types might have difficulty securing coverage or face non-renewal without a replacement lined up.
  • In high-risk property (e.g. large wood-frame complexes in wildfire zones, or coastal exposures prone to flood), capacity is still constrained and expensive. Insurers will offer coverage but may only do so in limited amounts, requiring brokers to layer multiple insurers to get full limits. This is directly tied to each insurer’s risk appetite and reinsurance backing.
  • For certain specialized liabilities (like environmental or product liability for hazardous industries), many underwriters remain cautious. For example, if a business deals with PFAS chemicals, nearly every insurer now includes an exclusion, and only a few niche underwriters might offer buy-back coverage at a high price – a capacity issue driven by fear of massive future claims.
  • Cross-border exposures also see limited capacity: a Canadian trucking company with substantial U.S. operations will find fewer excess liability insurers willing to cover those U.S. risks due to the nuclear verdict issue. Those that do participate might charge more or provide lower limits.

Impact of Capacity Trends on Businesses: For most companies, today’s abundant capacity and new Canadian entrants is good news. It means more choices of insurer and potentially better insurance pricing and terms. In practical terms:

• If one insurer offers a high renewal quote, an independent broker can likely find alternative markets willing to compete for your business.
• Broad capacity often leads insurers to negotiate on terms – for instance, they might agree to higher coverage limits or add policy enhancements in order not to lose an account to a competitor.
• However, if your business falls into a capacity-starved niche, these advantages may not materialize. In those cases, it becomes crucial to differentiate your risk (through risk improvements, storytelling of your risk management during underwriting, etc.) to make the few available insurers more comfortable extending capacity to you.

Overall, Canada’s strong capacity position – buttressed by global capital unless/until severe events occur – suggests a stable supply of insurance throughout 2026, one that should be sufficient to meet business demand in nearly all areas. It also underscores the importance of a broker’s role: navigating the market to tap the right capacity for each client, especially if creative layering or international markets are needed to address a tough exposure.

Product Scope and Coverage Trends: Broadening Where Possible, Restricting Where Necessary

Beyond price and capacity, “product scope” – the breadth of coverage terms and types of insurance products available – is shifting in 2026. In a soft market phase, insurers tend to get more innovative and accommodating with coverage (to win business), whereas in a hard market, they often tighten terms and withdraw from higher-risk offerings. Canadian commercial insurance buyers are now seeing some welcome enhancements in coverage options, even as certain emerging risks bring new limitations.

Here’s how product offerings and policy terms are evolving:

• Broader Coverage & Easing of Restrictions (Good News for Buyers): As competition intensifies, many insurers are loosening some of the restrictive terms that were imposed during the prior hard market. For example, coinsurance clauses and sublimits in property policies have been relaxed in many cases during recent renewals. Throughout 2025 ALIGNED used the competitive and softening market to improve coverage while still paying similar or lower premiums. This means that businesses could receive lower deductibles or self-insured retentions on liability and property policies and obtain broader coverage extensions, essentially getting more protection for their premium dollar. In cyber insurance, greater capacity and competition led to larger aggregate limits, added coverages (like better coverage for system outages or social engineering fraud), and the removal of coinsurance provisions for well-managed risks. Directors & Officers policies in 2025 also saw insurers adding enhancements and being flexible on terms (for instance, more carriers are willing to offer multi-year policy periods or broadened definitions of “claim” or “insured person” in D&O as a selling point).
• New and Niche Products: A stabilizing market environment allows insurers to develop new insurance solutions for emerging exposures. In Canada (as part of the global trend), we see underwriters expanding product scope in areas such as:
  • Parametric Insurance for natural catastrophes: Given the spike in weather disasters, some insurers now offer parametric cover (which pays out a set amount when a defined event threshold is met, like a quake of X magnitude or rainfall above Y mm) as an adjunct or alternative to traditional property insurance. This can be attractive for businesses seeking more certainty in disaster response.
  • Climate and ESG-related coverage: Global insurers’ push for sustainability is influencing Canadian offerings. For example, policies that cover green rebuilding costs (to rebuild with sustainable materials after a loss) or that insure climate resilience projects are more available. Also, insurers have introduced products like carbon emission warranty insurance or reputation insurance related to ESG incidents – niche products that expand what businesses can insure.
  • Cyber and Tech E&O enhancements: As companies increasingly rely on technology, policies have adapted. Coverage for things like cloud service failure, technology upgrade costs after a cyberattack, or intellectual property infringement are being bundled into cyber/E&O packages. These expanded scopes were less common or were expensive add-ons in the past.
  • Integrated solutions and endorsements: Insurers are packaging coverages to address new combinations of risk. For instance, supply chain insurance endorsements that cover both property damage and the contingent business interruption due to supplier failures (including non-physical damage triggers) are being marketed, influenced by global lessons from the pandemic and trade disruptions.
• Ongoing Tight Controls for Challenging Exposures: On the flip side, insurers remain wary of certain risks, leading to narrow coverage or exclusions in those areas. A clear example is the emergence of PFAS (“forever chemical”) exclusions on general liability and environmental policies – virtually every insurer now inserts a clause excluding liability for claims arising from PFAS, due to the enormous unknown future clean-up and health liabilities. Similarly, cyber insurers, while competitive, still impose strict cybersecurity protocol requirements for high coverage limits; companies without multi-factor authentication or with high ransomware exposure might get coverage offers that exclude ransomware events or come with very high deductibles. In property insurance, expected policy terms for 2026 include continued higher deductibles or sublimits for known trouble spots: earthquake coverage might come with percentage deductibles, wind/hail in hail-prone regions may have separate deductibles, and communicable disease exclusions (a legacy of the pandemic) largely remain in place. Insurers are also carefully wording policies around war and political risk (especially after the Ukraine conflict) – e.g. aviation and marine policies added refined war exclusions or premium surcharges for operations near conflict zones. So while coverage breadth is increasing in general, businesses will still encounter strict terms in policy areas where the industry doesn’t feel confident about the risk.
• Global Influence on Canadian Policy Terms: Because many commercial policies in Canada are underwritten by global insurers, international trends in coverage often filter into Canadian contracts. For instance, the rise of “social inflation” in the U.S. (huge legal awards) has led some Canadian liability underwriters to introduce or consider litigation limitation endorsements and to be more cautious granting very high liability limits. Global supply chain issues and trade policy (like tariffs) have prompted insurers to consider coverage for contingent business interruption more carefully – some now explicitly cover tariff-related supply chain losses, others exclude it, reflecting no standard approach yet. And as insurers worldwide grapple with higher reinsurance costs, some are trying out clauses to share those costs or cap their exposures, which could appear in Canadian large-property accounts (for example, a quota-share property policy among multiple insurers, rather than one insurer taking the full limit, which changes how coverage is structured for the buyer). All told, Canadian policyholders should stay alert to new terms and conditions in their policies – many changes are favorable, but it’s important to review details with your broker since some exclusions or clauses could impact coverage for critical scenarios.

Why Product Scope Matters for Your Business: Ultimately, insurance is not just about price – it’s about what is covered when a loss occurs. The recent trends in product scope mean two things for businesses:

1. Opportunity to secure better protection: With insurers willing to negotiate broader coverage in a competitive market, now is the time to push for enhancements. You might be able to add coverage for emerging risks that were previously uninsurable or eliminate restrictive provisions from your policies. For example, if during the hard market your property policy introduced a coinsurance requirement or lower coverage limits on certain assets, you can likely remove those in 2026’s renewal negotiations. Take advantage of the soft market to maximize your coverage breadth, so your organization is more fully protected.
2. Need to address remaining gaps: Conversely, know where the market is still restrictive and plan accordingly. If certain exposures – like cyber attacks or environmental liabilities – could significantly impact your business, be aware that insurance might only cover them partially or not at all right now. In those cases, focus on risk mitigation and alternative risk transfer. For example, if you’re in an industry affected by the PFAS exclusion, investing in process changes to eliminate those substances will not only reduce risk but also make you more appealing once insurers eventually offer coverage. In short, align your risk management strategy with the coverage landscape: exploit the areas where coverage is expanding, and control the risks where coverage is still limited.

Why These Trends Matter: Implications for Canadian Businesses and Insurance Costs

For Canadian businesses of all sizes, the 2026 insurance market outlook brings both relief and a call to action. The easing of rates and abundant capacity mean you have a chance to lower your total cost of risk – or at least get more value for what you pay – compared to just a few years ago. However, the variability by line of business and risk profile means savvy risk management and expert guidance remain essential. Here’s what to keep in mind as you plan your insurance and risk financing for 2026:

• Budgeting and Cost Allocation: Many firms will find their insurance budget for 2026 can be the same or less than 2025’s for equivalent coverage. With liability premiums leveling off or dipping, you might redirect savings to bolster coverage limits (for example, using a 5% liability premium reduction to purchase a higher umbrella limit – a smart trade-off given the rising lawsuit severities). Property insurance costs should generally stabilize; if your insurer grants a 10% rate cut due to a good claims history, that frees up funds to invest in loss prevention or other operational needs. Be cautious with auto insurance budgeting, however – if you operate a vehicle fleet, anticipate increased costs here and offset that by the savings elsewhere. For instance, a manufacturing company might save on property and liability but see its commercial auto premiums rise; understanding this dynamic can help reallocate funds internally (the savings from one line can cover the uptick in another).
• Risk Management ROI: The current market strongly rewards good risk management. Insurers are offering their best terms and lowest rates to businesses that demonstrate control over their risks. This creates a clear return on investment (ROI) for safety and prevention efforts. If you’ve fortified your building against fire and weather, or implemented a driver safety training and telematics program for your fleet, those actions can translate into tangible premium discounts or favorable coverage terms. Conversely, if you have unresolved risk issues (outdated electrical systems, frequent liability claims, etc.), this soft market is your window to fix them – not only to reduce claims, but also to ensure that when the market eventually does tighten, your business is seen as a preferred risk that insurers want to keep.
• Strategic Coverage Enhancements: With more accommodating insurers, 2026 is an ideal time to review and enhance your insurance program. Work with your broker to identify any coverage gaps or underinsured areas. Is cyber coverage still something you’ve been on the fence about due to past high costs? Premiums are more reasonable now, so it may be wise to obtain or increase that coverage while the market is friendly. The same goes for Directors & Officers insurance – if your company went without it or carried lower limits due to past pricing, re-evaluate now since D&O capacity is plentiful and rates are down. Essentially, consider using any premium savings to broaden protection, hedging against future uncertainties. Insurance is cyclical; what’s cheap today could become costly tomorrow, so locking in broader coverage at a good price is a forward-looking strategy.
• Global Risk Awareness: Remember that Canadian insurance conditions, while currently positive, are not isolated from the world. Global economic and climate trends can quickly influence your insurance costs. For example, a major string of international disasters could firm up property rates worldwide overnight, or a global supply chain shock might make certain coverages (like business interruption) more sought-after and thus more expensive. Business leaders should stay informed on global risk factors – not only for enterprise risk management, but also to anticipate potential swings in insurance availability or pricing. The relatively mild global insured losses in the past year helped create Canada’s soft market; it’s prudent to ask “what if” and scenario-plan for less favorable conditions in 2026 or 2027.

Navigating 2026 with the Right Partner: The Value of an Independent Broker

In a market landscape that’s dynamic and complex, Canadian businesses stand to gain by having a knowledgeable advocate to guide their insurance strategy. Working with an independent brokerage – like ALIGNED Insurance – is more valuable than ever in 2026. Here’s why:

• Market Access & Choice: An independent broker isn’t beholden to any single insurer. ALIGNED, for example, has relationships across the entire market, from major international underwriters to specialized niche insurers. In a year where capacity is plentiful, your broker should be shopping the market aggressively, ensuring you’re seeing the best rates and terms available. If one insurer isn’t competitive, an independent broker will know where else to look. This is particularly key in lines like property and liability where so many players are vying for your business – you need someone to run that auction for you, so to speak, to secure the optimal deal.
• Expertise in Risk Placement: In those areas where the market is still challenging (recall commercial auto or high-risk property), a skilled broker makes all the difference in securing coverage. We at ALIGNED Insurance pride ourselves on fighting for clients even when underwriters are hesitant. That might mean presenting your risk in the best possible light, leveraging our underwriter relationships to negotiate exceptions, or finding creative solutions such as layered programs, captives, or specialty insurers for unique needs. For example, if standard insurers are retreating from your industry, we might access Lloyd’s of London or other global markets to fill the gap. The technical, insightful approach we take – backed by deep knowledge of policy wordings and market trends – ensures that even as conditions shift, your coverage stays solid.
• Claims Advocacy and Service: Market trends ultimately matter most when you have a claim or a renewal decision to make. An independent broker works for you, the client, not the insurer. That means in the event of a claim, we advocate to get you the maximum entitled coverage and fast resolution, especially critical in large losses (which, given the theme of rising catastrophe and liability payouts, is not out of the question). And at renewal, if an insurer is imposing an unreasonable increase or exclusion, we can push back or find an alternative. In a soft market, it might be easy to get complacent – but a broker’s job is to keep pushing for better coverage and cost on your behalf. We don’t want you to just ride the market down; we aim to outperform the market by leveraging every advantage.
• Guidance Through Uncertainty: Lastly, an independent broker provides strategic guidance amid uncertainty. 2026 looks positive, but as we’ve emphasized, insurance is cyclical and influenced by global events. ALIGNED Insurance keeps a pulse on the industry – from climate science developments to legal changes and insurer solvency indicators. We translate that into practical advice for your business: whether it’s the right time to lock in a multi-year policy, how to structure higher deductibles versus premium savings, or planning for worst-case scenarios. Our goal is to ensure that no matter what the market throws at you – be it a sudden hardening or a specific coverage crisis – you have a risk management partner ready to protect your interests.

In Conclusion:

The 2026 Canadian commercial insurance outlook is largely favorable for businesses. Rates are stabilizing or falling (3-5% avg), capacity is robust, and coverage terms are improving in many areas, all of which help ease the cost of insurance for companies across Canada. These trends reflect both local market dynamics and Canada’s place in the global insurance environment. However, challenges remain in certain lines, and the situation can change with global shocks.

For business leaders, the mandate is clear: capitalize on the current market to strengthen your insurance program and control costs, but do so with vigilance and expert guidance. Now is the time to secure better terms, but also to prepare for the inevitable market cycle turn. By partnering with a dedicated independent brokerage like ALIGNED Insurance, you ensure that you have advocates who will navigate the nuances of rates, capacity, and coverage on your behalf, keeping you informed and protected amid market pressures. The insurance market may ebb and flow, but our commitment to fighting for our clients never wavers – and that can make all the difference in your risk management outcomes, in 2026 and beyond.