Canada’s insurance industry is emerging from 2026 with a mixed but broadly resilient picture: property and casualty insurers are posting stronger underwriting results and a stable outlook from ratings agency AM Best, life and annuity insurers are leaning into digitization to drive growth, and industry advocates are pointing to a sizable economic footprint even as they lobby for regulatory relief and new tools to manage catastrophe risk. At the same time, provincial data out of Alberta shows drivers still absorbing steep premium increases despite reforms meant to bring costs under control.
A Bigger Economic Footprint Than Many Realize
According to Insurance Bureau of Canada’s newly released InsurEconomy 2026 report, the property and casualty insurance industry contributed nearly $32 billion to Canada’s GDP in 2025, with a total economic impact — including indirect and induced effects — exceeding $53 billion. IBC estimates the sector supported roughly 361,000 jobs and generated more than $17 billion in federal and provincial taxes and levies last year. Insurers also held more than $35 billion in government and public-authority bonds, which IBC frames as evidence of the industry’s role in financing public infrastructure, though that figure is down from almost $39 billion in the association’s 2022 report.
“Fortunately, the P&C insurance industry continues to be a stabilizing factor for the Canadian economy, helping Canadians recover from disaster, and protecting households and businesses from economic shocks,” said Liam McGuinty, IBC’s vice-president of federal affairs. The report also highlighted workforce composition, finding women made up 67% of employees at P&C brokerages and 61% at insurance companies in 2025, compared with 47% across all industries nationally.
Canada's P&C Insurance Industry Economic Footprint (2025)
The report doubles as an advocacy document, repeating three priorities IBC has pushed through 2026: a national solution for earthquake risk, stronger resilience measures against severe weather, and what it calls more efficient, coordinated and growth-oriented P&C regulation. That regulatory push is tied to figures IBC and the C.D. Howe Institute have cited repeatedly this year — an 81% rise in P&C regulatory compliance costs to $753 million over two years, and an estimate that Canadian insurers spend roughly 17% of operating costs on compliance, compared with 6.5% for European insurers.
Auto Insurance Affordability Pressures in Alberta
While national figures point to overall sector strength, provincial data tells a more strained story for consumers. Alberta’s Automobile Insurance Rate Board, in its 2026 Market and Trends Report, found the average full coverage premium reached $1,903 in 2025, up 8.7% from $1,751 in 2024. The report attributed the increase to vehicle repair costs, catastrophic weather events and bodily injury claims, noting that inflationary pressures have pushed up comprehensive damage claim costs by roughly 27% in recent years.
Even with higher premiums, the AIRB said insurers lost nine cents for every dollar of coverage sold in 2025, though the industry’s private passenger vehicle loss ratio improved to 83.6%, down from 98.9% in 2024 and an estimated 97.1% in 2023. Total loss costs across all coverages fell to about $1,591 from $1,731, a normalization following 2024’s Calgary hailstorm-driven spike. Third-party liability costs — largely legal and litigation expenses — made up 58.2% of premiums paid by drivers, while vehicle theft loss costs in Alberta stood at $39.45 in the second half of 2025, compared with $63.80 in Ontario and $24.80 in the Atlantic provinces.
Aaron Sutherland, IBC’s vice-president for Western and Pacific Canada, said the findings validate the province’s move toward a care-first auto insurance model, set to take effect January 1, 2027. “Trial lawyers continue to play a costly role in the current system,” Sutherland said, arguing the new framework, which shifts away from litigation-driven compensation toward enhanced medical and income-replacement benefits, would improve long-term affordability. IBC has cited a June survey conducted with Yorkville Strategies showing 62% of Albertans supported the reform, though the Alberta Civil Trial Lawyers Association has objected, saying no-fault-style models require injured drivers to trade legal rights for unproven affordability promises.
Life Insurers Turn to Digitization, P&C Gets Stable Rating
Beyond auto and property lines, AM Best’s Best’s Market Segment Report found that a focus on digitization is bolstering growth for Canada’s life and annuity insurers, part of a broader modernization trend the ratings agency is tracking across the sector. On the P&C side, AM Best maintained a stable outlook for Canada’s property and casualty segment, citing strong earnings and improved underwriting results. The agency is also set to present its Canada insurance segment analysis at an annual market briefing in Toronto, where an executive panel is expected to discuss the growing use of managing general agents (MGAs) and specialty lines within the Canadian market.
Regulatory Costs and the Path Ahead
Taken together, the reporting this year points to an industry that regulators and rating agencies describe as financially stable and economically significant, even as it faces rising compliance costs, catastrophe exposure, and — in at least one major province — consumer frustration over premium growth. IBC’s continued push for a national earthquake risk solution and streamlined regulation, alongside Alberta’s looming shift to a care-first auto insurance system, suggests the debate over how to balance affordability, insurer profitability and regulatory oversight is likely to continue well into 2027.
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