New analysis from Grant Kelly, chief economist and vice president, financial analysis and regulatory affairs with the Property and Casualty Insurance Compensation Corporation (PACICC), shows the property and casualty (P&C) industry in Canada is off to a bad start in 2025, thanks to interest rate trends and poor underwriting results.

The not-for-profit corporation’s quarterly report, Solvency Matters, notes that the net comprehensive combined ratio for private passenger auto was over 100 per cent in all 13 Canadian provinces and territories. It also notes that a ratio over 100 per cent indicates an underwriting loss.

“Canada’s P&C insurers reported below-average financial results in the first quarter of 2025, with profits down 33.7 per cent from the same quarter last year. The industry’s return on equity (ROE) fell from 15.6 per cent in Q1 2024 to 9.8 per cent in Q1 2025,” Kelly writes. “The 2025 figure is slightly lower than the industry’s 50-year average ROE of 10.6 per cent.” 

Service expenses in the first quarter of 2025, meanwhile, were 9.7 per cent higher than in the year prior while total revenue grew by just 5.8 per cent over the same period. “The difference in growth rates between these two numbers reduced the industry’s net insurance services result to $2.4-billion, a drop of $527-million. This is 18 per cent lower than the first quarter in 2024.”

As for personal property, the report also notes that severe weather has resulted in more than $700-million in catastrophic losses so far in 2025, three times higher than the $200-million reported at the same time last year. The net comprehensive combined ratio for personal property was 117.9 per cent in Newfoundland and Labrador and 100.8 per cent in Ontario. Kelly does not discuss the other provinces, except to say that “underwriting losses in personal property insurance are particularly worrisome due to the significant price increases that insurers have introduced over the past two years.” 

Kelly concludes saying one quarter does not make or break a year, but adds: “the industry is not off to a good start in 2025.”