Rate predictions: Canada casualty
|
Trend |
Range |
| General liability, low/moderate risks |
 |
–5% to flat |
| General liability, high-hazard risks |
 |
Flat to +7.5% |
| Umbrella/excess liability, low/moderate risks |
|
–5% to flat |
| Umbrella/excess liability, high-hazard risks |
|
Flat to +5% |
| Auto-liability |
|
Flat to +10% |
Key takeaway
The Canadian insurance marketplace is expected to experience prolonged stability and manageable pricing. However, new external pressures and rapidly evolving changes to tax and regulatory regimes will create a push to define its independent profile and value proposition while providers and buyers are forced to quickly adapt and modify priorities as they navigate unpredictable challenges together.
Casualty
- In a capacity-abundant marketplace where reliance on rate-driven growth remains an unsustainable long-term strategy, account-rounding underwriting strategies have found commonplace, allowing carriers to maximize success while becoming a growing expectant among insureds looking for saving opportunities.
- Carriers are increasingly concerned about accepting risks with significant foreign exposure, particularly from the U.S., and prefer Canadian-domiciled exposure or a well-balanced portfolio.
- The unpredictable pace at which new tariffs will affect Insureds, and their operations will increasingly require them to reconsider their strategies and global footprint, while carriers will need to anticipate how these tariffs impact future claims settlements and associated costs, challenging low and moderate rates.
- The appeal of the Canadian market is rising with Insureds weighing options, opting to use the benefits of a steady Canadian-domiciled opportunities.
- Additional guidance sought from broker partners by insurers as market takes on more affirmative positions on key topics including tariffs, climate change, ESG and PFAS, that look to limit cover offers.
- Remains core to overall Canadian net-written premium and is expected to grow. Continues to be the leading casualty line experiencing stable year-over-year rate increases and still profitable for carriers in comparison to a highly challenged U.S. market. Carriers with a North American presence benefit from the diversification, often using the Canadian market to support strong overall results.
- Anticipated growth in new-entrant capacity comes from both first-time product offerings and former players making a return. This new capacity aims to help Carriers expand as a meaningful player in the primary casualty space, using it as an account-rounding.
- Insureds are increasingly considering the financial and operational benefits of shifting from owned fleet assets to leasing strategies. Meanwhile, carriers see heightened concern about lost controls over driver hiring, safety protocols and vehicle maintenance.
- Premium savings are primarily driven by the introduction of new competition in the market.
- Persistent rises in theft, replacement and repair costs, particularly as vehicles modernize, are placing further pressure on premiums and claims management strategies.
- Insureds are using savings to purchase additional umbrella/excess liability limits while cost to purchase are low, taking advantage of the current favorable pricing before potential increases due to the unpredictable value of the Canadian dollar.
- A continued focus on well-diversified risk portfolios, with particular attention to rates on working layers above U.S. risks, where substantial claims are possibly rising and have the potential of penetrating.
- Despite the expected rise in claims settlement costs and expenses, carriers continue to deploy large lines of capacity, which remain available at competitive rates.
- The introduction of new MGAs has increased available capacity, challenging existing providers and creating opportunities for market rates to remain suppressed as these new markets compete aggressively for market share.
Geopolitical influences and foreign interference prompt a return to unpredictability and uncertainty, leading to more conservative behavior in response.
- Operational decisions continue to be reshaped and re-evaluated due to ongoing challenges in predicting how geopolitical decisions will influence new tax and cost regimes.
- Insureds are adopting highly cautious approaches to purchasing, carefully evaluating carriers based on risk, the totality of their insurance solutions and factors like mergers and acquisitions, expansion of foreign or global operations, rethinking their workforce strategies, upcoming contractual arrangements.
- Amid uncertainty, Insureds will implement slowed, measured decision making to reassess their insurance strategies, by maintaining cautiously static on the structure of their insurance solutions or by evaluating the adequacy of their current coverage to ensure comprehensive protection in a volatile global landscape.
Continued focus on investing in and advancing the utility of AI-generated modeling.
- Canada remains a moderately growing country for development and adoption, benefiting from where there’s global outreach and influence. However, it must navigate and adapt to the varying legislation and distinctions across Canadian jurisdictions.
- Leveraging digitalization will continue to target enhancing the client experience, reducing overhead costs and redundancies, streamlining claims settlement processes and strengthening fraud detection capabilities.
- Carriers have largely revisited their pricing models over the last five years, recognizing that aging and ineffective models were no longer suitable in a rapidly changing environment, and driven by the need to remain relevant and competitive.
- Risk differentiation is significantly impacting underwriting, serving as a powerful tool against outdated beliefs and models.
The business landscape continues to present challenges, tightening contractual obligations and highlighting the need to reevaluate and understand the consequences of poor risk management and employ strong risk transfer solutions.
- Rise in the focus on environmental impairment, employment practices liability, product recall and professional liability coverage, with these becoming increasingly contractually mandated in recent years as insureds adopt stronger risk transfer strategies to protect themselves and ensure adequate protection against potential claims.
- Environmental, social and governance (ESG) risks are increasingly driving liability losses, particularly in product liability, environmental liability, employment practices, cyber/data privacy breaches and construction liability. There’s a heightened expectation to reconsider risk transfer solutions to better protect the company, with more emphasis on paying for coverage to address emerging exposure gaps.
Disclaimer
WTW hopes you found the general information provided here informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, WTW offers insurance products through licensed entities, including Willis Towers Watson Northeast, Inc. (in the United States) and Willis Canada Inc. (in Canada).
