Insurance Marketplace Realities 2025 – Canada casualty

Rate predictions: Canada casualty

	Trend	Range
General liability, low/moderate risks		-5% to +5%
General liability, high hazard risks		Flat to +10%
Umbrella/excess liability, low/moderate risks		-5% to +5%
Umbrella/excess liability, high hazard risks		Flat to +10%
Auto liability		Flat to +10%

Casualty

General liability

• In a moderately stable, buyer-friendly market, carriers are focused on balancing the retention of risk portfolios in key industry sectors while maintaining rate sustainability amid growing competition. As competition increases, many markets are adjusting their underwriting strategies, adopting a more flexible approach to capitalize on new business opportunities.
• The use of larger primary limits and pairing primary lines with the umbrella lines in single-carrier solutions are making a notable resurgence. There is greater flexibility to restructure programs and consider more customized solutions.
• Review of deductible and retention structures remains prevalent to focus on long-term program sustainability and profitability.
• There is an elevated emphasis on enhancing and expanding casualty analytical capabilities to significantly refine pricing and underwriting sophistication and as a tool to tackle new business acquisition and overall client retention.
• As key interest rates continue to be downgraded and its impact on future inflationary factors are realized, carriers will still look to apply pressure on rate to support anticipated increased future claim costs.

Automobile liability

• Focus continues on driver hiring, safety protocols and vehicle maintenance procedures.
• Minor deceleration in the deterioration of claim trends is due to carriers working to actively right-size rating.
• Persistent vigilance on rate maintenance continues to address the high cost of repair and replacements costs.
• The surge in vehicle theft claims has prompted carriers to develop innovative vehicle tagging solutions, offering premium credits to insureds who adopt these security and safety measures.
• With ongoing challenges in maintaining profitability, new capacity remains limited and is typically offered only as a complement to key existing lines of business.

Umbrella/excess liability

• Carriers maintain a cautious approach toward extensive U.S. and international exposure, preferring to focus primarily on risks centered in Canada.
• An increase in claims penetrating the umbrella layer, particularly in high-risk sectors, such as construction, heavy fleet/transportation, and healthcare, has resulted in more restrictive underwriting and continued rate increases.
• Despite capacity viewed in abundance, carriers are facing higher reinsurance costs and reduced reinsurance capacity due to rising claim expenses and the growing frequency of severe losses, leading to a more conservative approach.
• Insurance buyers continue to see the umbrella and low-attaching excess liability layers as an opportunity to seek the best value in balancing coverage limits with premium costs, creating re-marketing opportunities without disrupting primary layers.

There is a renewed emphasis on innovative risk management strategies tailored specifically for the casualty insurance sector.

• Carriers look to develop sophisticated risk management and resilience-building solutions for their clients through on-site and desk-top risk assessments, safety and employee training, and compliance protocols. Development and high adoption of practices look to be accompanied by premium discounts or other incentives for businesses with strong risk management practices.
• There is a growing attention on normalizing the employment of carrier risk reviews for casualty-related exposures.
• Per- and polyfluoroalkyl substances (PFAS) and forever chemical exposures continue as a critical emerging threat. Within a prevailing competitive marketplace, carriers face challenges in applying exclusions while combating internal pressures, especially for key industries where the exposure is highly relevant.

Social inflation and socio-economic issues will continue to deeply influence and shape a new insurance landscape.

• As public interest and regulatory/policy change around environmental preservation, human rights and consumer protection issues continue to grow; carriers are pressured to modify their risk management and underwriting methodologies, which will continue to test their accuracy of pricing risks.
• Carriers look to adopt stronger defense cost-management strategies, including reducing litigation risk and costs, reassessing their reserving practices, managing inflated settlement costs and developing stronger dispute resolution mechanisms.
• The rise in such litigation trends is prompting insureds to rethink their insurance buying behavior as they consider purchasing standalone coverage tailored to address specific liabilities that traditional general liability policies may not fully cover, such as environmental impairment, employment practices liability, product recall and cyber policies.

Growing unpredictability in forecasting the frequency and severity of Canadian natural catastrophe patterns creates pause in carrier approach to market, changes to appetite and ability to support clients.

• After a challenging second and third quarter of 2024, marked by severe weather events and catastrophic disasters, carriers are adopting a conservative approach to their portfolios to ensure long-term sustainability.
• Carriers are challenged to maintain critical claim service levels as the industry continues to peak with change to claim volume and intensity, increasingly necessitating the need for redeployment of employees and employing third-party resourcing.
• Difficulties in upholding critical claim service levels as the industry faces peaks in claim volume and intensity are driving the need for redeploying employees and leveraging third-party resources.

Disclaimer

Willis Towers Watson hopes you found the general information provided in this publication informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, Willis Towers Watson offers insurance products through licensed entities, including Willis Towers Watson Northeast, Inc. (in the United States) and Willis Canada Inc. (in Canada).