Commercial Insurance Rates Are Falling — Here's What Smart Canadian Businesses Are Doing About It

Canadian commercial insurance rates have been falling for over a year, and the decline is accelerating.

According to Applied Systems' latest Commercial Index, average renewal rate increases dropped to 2.23% in Q4 2025 — less than half of where they were a year earlier (5.02% in Q4 2024). Every major commercial line is trending down: hospitality at just 0.96%, real estate property at 1.68%, professional services at 1.83%, construction at 2.52%.

Marsh's Global Insurance Rate Index tells the same story from the carrier side: global commercial rates declined 4% in Q4 2025, with Canada, the UK, and Latin America seeing steeper drops of 7%. Property led the way down at -9%, followed by cyber at -7%.

For business owners who spent the last several years absorbing steep rate increases, this is welcome relief. But here's the thing most businesses get wrong: they treat softening rates as a chance to simply pay less.

The smart ones treat it as a chance to get more.

Why Falling Rates Are an Opportunity, Not Just a Discount

When the insurance market hardens — when rates spike and capacity shrinks — businesses cut coverage to manage costs. They increase deductibles, reduce limits, drop lines like cyber liability or employment practices liability. It's rational behaviour in a difficult market.

But those gaps don't disappear when rates come down. They persist. And they represent real exposure.

A softening market is the ideal time to:

• Close coverage gaps that opened during the hard market. That cyber policy you dropped in 2023? It's significantly cheaper now — cyber rates have declined 7% year-over-year.
• Increase limits on critical lines. If your general liability limit hasn't kept pace with your revenue growth, now is the time to address that.
• Add emerging risk coverage that wasn't available or affordable before — AI liability, supply chain interruption, or enhanced business continuity.
• Restructure your programme with better deductible strategies now that premiums give you room to optimise.

What Your Broker Should Be Telling You Right Now

Here's a straightforward test of whether your broker is working for you: have they called you about this?

In a softening market, a proactive broker reaches out with specific recommendations — not waiting for renewal to mention that rates went down. They should be analysing your current programme against current market conditions, telling you where the gaps are, what they'd cost to close, and why now is the right time.

If your broker's idea of service is sending a renewal notice and waiting for your signature, you're leaving money and protection on the table.

The Sectors to Watch This Spring

Construction: With spring building season approaching across most provinces, contractors and project owners should be reviewing their builder's risk, wrap-up liability, and subcontractor compliance programmes now — before projects break ground. Construction rates are down to 2.52%, but capacity in certain specialty lines remains tight.

Property management: Real estate property rates dropped to 1.68%. Property managers who tightened coverage during the hard market should be restoring limits and addressing tenant insurance compliance gaps. Tools like Sherpa make ongoing compliance monitoring straightforward — but the coverage itself needs to be in place first.

Hospitality: At just 0.96% rate increases, hospitality is essentially flat. If you're in food service, events, or accommodation, this is the most favourable market in years. Don't waste it on status quo renewals.

Professional services: Rates at 1.83% mean E&O and professional liability are more accessible. If you expanded into new service lines during the last few years, make sure your coverage reflects what you actually do today.

What the Market Forecasters Are Saying

Industry experts polled at a recent Canadian Underwriter webinar are split on how long the soft market lasts:

• 28% predict softening through end of 2026
• 33% expect it to continue through mid-2027
• 28% think it could extend through end of 2027

Nobody is predicting a sharp reversal. But markets are cyclical, and the time to lock in better coverage at better rates is while conditions favour the buyer.

The Bottom Line

Falling rates are not a signal to do nothing. They're a signal to act. Review your programme. Close the gaps. Expand where you're underinsured. Work with a broker who brings you opportunities, not just invoices.

At Summit, we're proactively reviewing every client's programme against current market conditions. If you'd like a no-obligation coverage review, reach out to our team.

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