Canada’s commercial P&C insurers are poised to shape the future

Reimagining commercial insurance in Canada depends on the industry’s willingness to apply fresh thinking across operational domains and open the door to priorities like digital transformation and alternative approaches to risk transfer. 

Uncertainty, the evolving demand for innovative insurance solutions and the need to adapt to changing compliance requirements are reshaping an industry that has faced a prolonged hard market for the last several years. Catastrophic — and increasingly climate-driven — losses, inflationary pressures and rising reinsurance costs are forcing insurers to redefine risk selection, adjust pricing models and maintain strict underwriting discipline to protect profitability.

All of this is in addition to broader, cross-industry threats that insurers cannot afford to ignore, including evolving and emerging cybersecurity risks, which tend to increase during difficult or unpredictable periods of time.

While 2024 was another year of substantial losses for commercial insurers, early indicators for the 2025 renewal season suggest a more measured approach from reinsurers. Rather than a blanket correction, reinsurers are expected to take a differentiated, case-by-case view based on each insurer’s exposure and loss experience. Insurers appear to be adapting by leaning into advanced risk assessment tools, predictive modelling and innovative coverage strategies. They’re also reassessing capital allocation, portfolio diversification and retention strategies to establish long-term resilience in a climate-impacted landscape. 

Remaining competitive in this environment requires insurers to carefully navigate these competing forces. Drawing on innovation and data-driven strategies can help insurers manage risk effectively, while also teasing out the opportunities layered within disruption.

In this environment, what specific actions should commercial insurers consider?

• Navigate financial volatility with dynamic pricing and capital strategies
• Proactively manage emerging risks through enhanced risk intelligence
• Redefine broker and MGA roles as strategic risk advisors
• Futureproof compliance and reporting amid regulatory shifts
• Build operational resilience through digital infrastructure and cybersecurity

Modernizing core systems, integrating AI and adopting dynamic pricing models can help insurers streamline operations, enhance decision-making and personalize services to stand out.

As distribution models evolve and reshape engagement, the commercial insurance industry is undergoing a major transformation. Insurers that proactively adapt to these changes will be well positioned to drive growth and remain competitive in an increasingly complicated operating environment and market.

New business models, alternative risk transfer (ART) solutions and an ecosystem-based approach to strengthening capabilities through strategic alliances are generating new ways of working and serving customers in a demanding market abounding with new challenges.

How so?

Businesses are looking for increasingly digital experiences, greater flexibility and innovative products tailored to new and emerging risks. In response, insurers are rethinking engagement through enhanced distribution models — i.e., digital first — new product offerings and technology-driven solutions.

Despite the rise of digital-first models, brokers remain indispensable, particularly for small and medium-sized businesses, which require expert guidance in navigating coverage complexities. Rather than displacing brokers, we see insurers investing in digital tools that streamline the quoting and binding process. By removing the need for direct underwriter involvement, these tools reduce delays and administrative friction, speeding up transactions for insurers and brokers alike.

It’s early days yet. Brokers continue to face challenges, including complicated processes like manually inputting data into different portals. Industry organizations are working to improve this reality, developing standardized codes and application programming interfaces (APIs) that streamline digital quoting and improve workflow integration.

In Canada, brokers themselves are seeking to adopt digital platforms to strengthen client relationships and enhance engagement. All the while, broker-client relationships are becoming more collaborative, as businesses increasingly expect advisers capable of explaining policies as well as industry, regulatory and risk management insights and strategies.

Meanwhile, the approach to ART solutions is also changing. As Canada’s commercial insurance landscape shifts, industries like energy, manufacturing and real estate — where companies often face high premiums, structure underwriting and limited capacity — are leading a shift towards ART solutions. These provide greater control and flexibility than traditional insurance.

Within this scope, captive insurance is emerging as a preferred risk-financing strategy — and commercial insurers have a critical role to play in facilitating these alternative solutions. Doing so positions insurers as partners, not just providers. Drawing on technology and data-driven insights, many insurers are developing hybrid models that blend traditional coverage with alternative structures, enabling clients to balance risk retention with transfer.

All the while, strategic alliances and ecosystems are becoming more prevalent in the industry. This includes forging and strengthening relationships with insurtechs. Insurers are no longer operating in silos, instead engaging in collaboration to build new capabilities. This allows commercial insurers to enhance offerings, access specialized expertise and make the most of advanced technologies. This is one more way the industry is expanding services to meet new market demand for value-added solutions beyond traditional coverage.

In this environment, what specific actions should commercial insurers consider now?

• Improve operational agility through technology
• Innovate product offerings
• Strengthen broker and MGA partnerships
• Explore alternative risk transfer solutions
• Build strategic alliances

Empowering people with advanced tools helps insurers adapt to shifting market dynamics and operate with agility. This strengthens customer engagement, competitive positions and sustainable growth.

Advanced technology in and of itself does not drive successful transformation. Rather, it’s the strategic balance of technological advancements with human-centric strategies that can help commercial insurers make sustainable progress.

Across the industry, insurers must modernize core systems to generate much-needed operational agility. They must also understand, embrace and deploy advanced technologies like AI, automation, Internet of Things (IoT) and dynamic pricing models to successfully revolutionize underwriting, claims processing and risk assessment.

Case in point: legacy systems present a range of challenges, from limited flexibility and high maintenance costs to poor data integration and cybersecurity vulnerabilities. These platforms hinder an insurer’s ability to respond quickly to evolving market demands.

This is key to offering the kind of personalized and efficient solutions business have come to expect.

Insurers that modernize core systems are increasingly integrating with leading insurtechs to build advanced, connected ecosystems. Teaming up in this way enables insurers to harness real-time data, enhance risk assessments and streamline claims processes. All of this supports better decision-making and improved customer experiences. By embedding insurtech capabilities directly into policy administration and claims systems, insurers can also enhance operational efficiency and competitiveness.

In many cases, wider business transformation is now catalyzing technological advancement. By integrating AI, IoT, telematics and dynamic pricing models, insurers are not only improving operational efficiency but also reshaping risk assessment, underwriting and claims management. To stay competitive in this evolving landscape, insurers are adopting advanced technologies to optimize workflows, enhance accuracy and deliver more personalized solutions. 

However, taking a people-first approach to adopting these advanced technologies defines just how successful the transformation will be. Overall, Canada’s commercial insurance industry faces a growing talent crisis — one that threatens long-term stability and competitiveness. The impending retirement of seasoned professionals, coupled with the challenge of attracting younger talent, is creating a widening skills gap.

Across the industry, commercial insurers are addressing these realities by creating a holistic talent advantage. That means building an employee value proposition that purposefully addresses culture and workplace; learning, skills and career pathways; talent health and flow; work technology and gen AI; and total rewards. Succeeding on these fronts requires insurers to bridge the talent gap through upskilling, mentorship and modern talent strategies that sustain industry expertise and spark innovation.

This foundational work is necessary to strengthen the industry’s talent pipeline and build a more sustainable future. Still, this work must also inform the broader technology strategies in the transformation age. It’s a tall order. But insurers that put people at the heart of strategic decisions and technology adoption will be best positioned to turn this potential into meaningful and lasting progress.

Considering your people’s needs, expectations, capabilities and skillsets is the first step to adopting advanced technologies. Build the plan with them in mind, engage them in the process and layer learning within the flow of work to empower both your people and your organization to make the very most of advanced technologies over time.

In this environment, what specific actions should commercial insurers consider now?

• Foster humans@centre alongside technology
• Modernize core systems for operational agility
• Deploy advanced technologies
• Implement dynamic pricing models
• Enhance cybersecurity and operational resilience