Canada’s property and casualty insurance sector is navigating a period of overlapping pressures, as rising claims costs from extreme weather, an affordability crisis in auto insurance, and a wave of corporate consolidation converge across the industry. Recent regulatory filings, disaster response efforts and merger activity illustrate an industry adjusting its pricing, structure and product lines to keep pace with mounting risk.
In Alberta, the province’s independent auto insurance regulator, the Automobile Insurance Rate Board (AIRB), released its 2026 Market and Trends Report showing that the average full-coverage premium reached $1,903 in 2025, an 8.7 percent increase from $1,751 the year before. Despite that increase, insurers reported losing nine cents for every dollar of auto coverage sold in 2025. According to data from MSA Research cited in the report, insurers lost money on auto insurance sales in Alberta in every year between 2013 and 2024 except 2021 and 2022, when claims fell sharply during the COVID-19 pandemic.
The report attributed much of the cost pressure to litigation. Third-party liability costs — predominantly legal and litigation expenses — made up 58.2 percent of the premiums drivers paid in 2025. Aaron Sutherland, Insurance Bureau of Canada’s (IBC) vice-president for Western and Pacific, said the findings confirm “Alberta’s auto insurance system is broken, as the availability and affordability of coverage continues to decline,” adding that “trial lawyers continue to play a costly role in the current system.”
The report also pointed to easing pressure from comprehensive damage claims, which had spiked in 2024 following a major hailstorm in Calgary. Alberta’s total loss cost across all coverages fell to about $1,591 in 2025 from $1,731 the prior year, while the industry’s private passenger vehicle loss ratio dropped to 83.6 percent from 98.9 percent in 2024. Vehicle theft costs held steady at roughly $39.45 per policy in Alberta during the second half of 2025, compared with $63.80 in Ontario and $24.80 in Atlantic Canada. Inflationary pressures have pushed up the cost of repairing vehicles for comprehensive damage claims by about 27 percent in recent years, the report found.
Those figures are being used to bolster the case for Alberta’s incoming “care-first” auto insurance model, set to take effect January 1, 2027, which shifts the system away from litigation-driven compensation toward enhanced medical and income-replacement benefits. Sutherland said the reform “will save drivers hundreds annually while providing the greatest level of care and recovery benefits in Canada for those injured in collisions.” IBC has previously cited survey results, conducted with Yorkville Strategies, showing 62 percent of Albertans support the reform. The Alberta Civil Trial Lawyers Association has objected to the shift, arguing earlier this year that no-fault-style reforms require people with serious injuries to trade access to justice for unproven affordability claims.
Climate-related losses continue to strain insurers elsewhere in the country. Following flooding and a declared state of local emergency in Nova Scotia’s Inverness, Richmond and Victoria counties, IBC activated its Virtual Community Assistance Mobile Pavilion (V-CAMP) helpline to guide affected residents through the claims process. Amanda Dean, IBC’s vice-president for Ontario and Atlantic, said insurers act as “second responders” once immediate safety concerns are addressed, urging residents with damage to their homes, vehicles or businesses to contact their insurer promptly. IBC guidance distinguished between coverages that are often optional, such as overland flood and sewer backup protection, and those typically included in standard policies, such as wind damage and certain water intrusion through roof damage. The organization noted that flood and water-related insured losses have risen more than 300 percent over the past two decades, reinforcing IBC’s continued calls for stronger flood-risk mitigation measures.
Against this backdrop of rising claims costs, the industry is also consolidating and diversifying. The Wawanesa Mutual Insurance Company, founded in 1896 and headquartered in Winnipeg, announced it has received all regulatory approvals needed to complete its acquisition of Everest Insurance Company of Canada from Everest Group, Ltd. First announced in March, the deal is expected to close in the fourth quarter of 2026 and will add specialty commercial insurance products to Wawanesa’s offerings. Evan Johnston, Wawanesa’s president and CEO, called the transaction “a major milestone” in expanding the mutual insurer’s commercial capabilities, adding that Everest Canada will continue operating as a distinct entity within the Wawanesa group following closing. Wawanesa reports more than $4.1 billion in annual revenue, $12.5 billion in assets, and serves over 1.8 million members across Canada.
The growing role of specialty lines and managing general agents (MGAs) in the Canadian market is also drawing scrutiny from ratings agencies. AM Best has scheduled an annual market briefing in Toronto featuring an executive panel dedicated to the use of MGAs and specialty insurance lines, alongside a broader segment analysis of the Canadian insurance industry — signaling continued industry interest in how distribution models and product diversification are evolving alongside cost and climate pressures.
Taken together, the developments point to an industry recalibrating on multiple fronts: regulators and insurers pressing for structural reform to address unprofitable and increasingly unaffordable auto coverage, insurers and consumers grappling with the rising financial toll of extreme weather, and companies restructuring through acquisitions and specialty product expansion to manage risk and growth in a shifting market.
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