Soft market,
sharp competition
IN Partnership with
Why pricing is no longer a differentiator in Canada’s commercial market
More
THE CANADIAN commercial insurance market has continued to soften across lines of business. According to Marsh McLennan’s Global Insurance Market Index, rates fell by an average of four percent in 2025, with that softening continuing into Q1 of 2026. And while soft markets bring a lot of opportunities, they also instigate fierce competition – propelling carriers to step up their game or lose out.
But what’s driving these shifting market conditions? Well, according to Terryl Varghese, senior commercial property, casualty and fleet underwriter at Unica Insurance, it’s a golden combination of lower reinsurance costs, expanding capacity, and fewer natural disasters.
Founded in 1955, Unica Insurance provides innovative niche Commercial and Personal Insurance solutions to protect VIP clients’ homes, vehicles, and businesses. Delivering best-in-class insurance protection backed by a renowned claims experience, Unica allows its customers to safeguard their hard-earned assets and protect their momentum. Unica is a subsidiary of Beneva Insurance Company, one of the largest property & casualty insurers in Canada. Our products are delivered exclusively through a network of select professional insurance brokers across Ontario.
Find out more
Weather-related damages wreak havoc
2024 was one of the costliest years here for severe weather-related losses, landing at around $8.5B
“Insurers have been reporting improved results, higher investment income, and increased competition – [all of which] have helped stall the steep premium hikes”
Terryl Varghese,
Unica Insurance
2025: a much-needed CAT reprieve
“[Firstly], market conditions are being driven by fewer catastrophic losses here,” he told IB. “There have not been many events in 2025 or 2026 compared to the CAT losses in 2024. The Insurance Bureau of Canada reported that 2024 was one of the costliest years here for severe weather-related losses, landing at around $8.5 billion. In 2025, that figure was around $2.4 billion – and right now we’re seeing the carryover effects of that.”
In 2024, the number of catastrophe claims exceeded 273,000 – also a record – surpassing the previous high of 197,000 in 2016, with four individual events each generating losses exceeding $1 billion.
Setting aside CAT events, another key market driver here is increasingly lower reinsurance costs. With historically high amounts of reinsurance capacity available, global reinsurance “rate-on-line” rates softened by approximately 8 percent in 2025, keeping commercial property rates in Canada stable. Both domestic insurers and foreign markets are competing for Canadian risks, generating downward pressure on rates – a trend that’s continued into 2026 as reinsurance capacity remains plentiful.
“New entrants coming into the market are also adding more capacity and intensifying competition across the market,” added Varghese. “[What’s more], there’s stronger insurer financials. Insurers have been reporting improved results, higher investment income, and increased competition – [all of which] have helped stall the steep premium hikes that businesses experienced in 2024.”
engage underwriters directly. A 2025 Insurance Business America survey of 1,200 insurance professionals found that responsiveness is the single most important attribute brokers look for in their wholesale and carrier partners, rated at an average importance score of 4.81 out of 5.
“There’s also the ease-of-doing-business aspect,” Varghese added. “Given the increased capacity in the market, differentiation comes down to the turnaround time on quotes and renewal. [There’s also a need for] partnership and technical expertise. [Brokers] are looking to collaborate with their insurers to find creative solutions to address complex risks.”
Underwriting clarity and consistency
Soft markets are competitive ones. For carriers it becomes a question of how they can offer best-in-class service coupled with speed, efficiency, and collaboration – and already having a long-standing broker relationship is a great position to be in.
“Here, underwriting clarity and consistency are very important,” Varghese told IB. “Right now, given the environment, price is no longer a differentiator. In this current, time-sensitive market, brokers are looking to engage with their underwriters more directly and offer technical insight. [Furthermore], in a dynamic market, brokers gravitate towards carriers that they can depend on, as predictability enables them to place business effectively and manage client expectations.”
With such fierce competition on the horizon, it’s more important than ever that carriers invest in a specialized underwriting approach. Because, as Varghese explained, it really helps brokers when their carrier partners find solutions for risks that don’t necessarily fit a traditional category.
“Most underwriters will [categorize] what a risk falls into and go with that. [However], if you can find a way to work directly with a broker, you can address risks that don’t fit into that standard box. This also allows brokers to diversify their portfolio with the insurer. So instead of being all focused on one segment, this helps diversify the broker’s business with the insurer as well as delivering competitive pricing solutions for risks that extend beyond the appetite of other insurers.”
Pricing wins business, superior service retains it
Looking ahead, insurers who want to not only survive but thrive in this market need to make themselves indispensable to their broker partners – going above and beyond in terms of speed, service level, and specialization.
Published June 15, 2026
Share
“While pricing plays a big role in winning the business, superior service is fundamental in retaining it”
Terryl Varghese,
Unica Insurance
2025 saw a decrease to $2.4B
Canada’s insured losses from catastrophic weather and wildfires reached approximately $37B between 2016 and 2025 – compared to $14B in the prior decade
Source: Custom Market Insights / Mordor Intelligence / IBC
Source: Insurance Business America Wholesale Brokers & MGAs 2025 survey of 1,200 insurance professionals, November 2025
Responsiveness is the top priority brokers look for in wholesale and carrier partners, rated at an average importance score of 4.81 out of 5
Are you ‘responsive ready’
for 2026?
Yet the performance rating from the market comes in at just 4.18, creating a gap of 0.63, the largest discrepancy of any measured attribute
In terms of the environment in which brokers are having to navigate today, Varghese told IB that retention of business is a big concern, with soft markets bringing increased competition for profitable and target risk.
“There’s also increased risk complexity while rates are dropping. Brokers are being asked to [offer] more sophisticated risk advisory work in an increasingly competitive environment.”
Soft markets, shifting broker expectations
Soft markets often shift broker expectations too, especially where their carrier partners are concerned. Brokers are now looking for responsiveness and speed, as well as an ability to
“While pricing plays a big role in winning the business, superior service is fundamental in retaining it,” added Varghese. “If you can write it one year, you have to be able to provide the service in order to retain it the [following] year.”
And this approach certainly seems to be working for the sector. Commercial insurance has the highest customer- retention rate of any industry at 86 percent, according to a 2025 First Page Sage analysis of 10,000+ firms – mainly driven by high switching costs and long-standing broker-carrier relationships.
“The second [aspect here] is ease of doing business. Differentiation will increasingly depend on a quick turnaround of quotes and data-driven insights which strengthen broker relationships,” said Varghese. “Finally, there’s underwriting discipline which balances the interests of insurer and the broker. Disciplined underwriting allows insurers to respond to changing market conditions with greater consistency and stability.
“At Unica, we’re looking at all these aspects as we progress throughout the rest of the year and into 2027. At the same time, Unica has expanded its commercial appetite to better respond to soft market conditions, while also taking a more transparent and structured approach to how that appetite is communicated. Supported by clearer tools and guidance, this gives brokers greater visibility into both our target risks and areas of lower appetite, enabling them to place business with greater confidence, reduce uncertainty, and strengthen long-term partnerships in an increasingly competitive landscape.”