Canadian Commercial Insurance Rates Continue to Soften in Q4 2025
Event summary
- Applied Systems' Q4 2025 Commercial Index shows average premium rate increases dropped to 2.23%, down from 5.02% in Q4 2024.
- All major commercial lines—Real Estate Property, Business and Professional Services, Construction, Hospitality Services, and Retail Services—saw rate decreases quarter-over-quarter.
- Hospitality Services experienced the steepest decline, with rates falling to 0.96% from 2.33% in Q3 2025.
- Retail Services saw the highest rate increase at 3.12%, though still down from 3.90% in Q3 2025.
The big picture
The Canadian commercial insurance market has been softening since mid-2024, reflecting broader industry trends of reduced risk exposure and increased competition. This shift presents both challenges and opportunities for brokers and insurers, as lower rates may drive demand for additional coverage but also squeeze margins. The long-term sustainability of these trends will depend on economic conditions and regulatory developments.
What we're watching
- Market Softening
- How the continued decline in premium rates will impact insurer profitability and broker strategies.
- Coverage Expansion
- Whether brokers will leverage lower rates to encourage clients to expand coverage options.
- Industry Adaptation
- The pace at which insurers adjust underwriting practices in response to sustained rate decreases.
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