Canadian P&C Insurance Outlook 2025: Recovering From the Worst Weather-Related Losses on Record

Canadian property and casualty (P&C) insurers have weathered some of the worst-ever quarterly insured losses in Q3 2024. Four natural catastrophes, within weeks of each other, affected some of the most populated regions in Canada, leading to the highest natural catastrophe loss year since record-keeping began. Yet, despite the higher severity and incidence of natural catastrophes, P&C insurers rated by Morningstar DBRS have shown stability and a resilient credit profile helped by improved investment returns and prior pricing actions, specifically in the personal property insurance market where weather-related losses have had the most adverse impact.

Key Highlights
-- P&C insurers in Canada showed stability and resilience despite a tough 2024 that saw the highest natural catastrophe insured losses ever recorded.
-- The pricing environment is diverging among personal and commercial insurance segments with differences set to become more pronounced in 2025.
-- Investment returns will continue to bolster overall returns but with a smaller contribution to overall earnings as interest rates have declined.

"We expect higher reinsurance prices, increased risk retentions, and property insurance premium increases in 2025," says Nadja Dreff, Senior Vice President, Global Insurance and Pension Ratings at Morningstar DBRS. "On the other hand, the pace of price increases is continuing to decelerate in some commercial lines."