Several specialized firms have released their outlooks for the property and casualty insurance (P&C) market in 2025. Losses tied to extreme weather events remain a constant concern in these various reports.

In its 2025 outlook for North America, Hub International has issued recommendations for business leaders regarding risk management, insurance, and employee benefits.

The survey gathered input from approximately 900 executives in Canada and the United States across 11 distinct industries. Among the risks cited as potentially affecting business profitability in 2025, climate change and natural disasters ranked third at 45 per cent, followed closely by cybersecurity at 44 per cent.

In a note published on December 12, Morningstar DBRS stated that the credit ratings for Canadian P&C insurers generally show stable prospects for 2025—unless the industry experiences another series of major claims like those seen in the third quarter of 2024.

“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. We expect higher reinsurance prices, increased risk retentions, smaller investment income contribution to earnings and property insurance increases in 2025. On the other hand, the pace of price increases is continuing to decelerate in certain commercial lines,” the agency noted.

“For example, Munich Re, the largest global reinsurer, reported approximately the same amount of natural catastrophe losses in Canada in Q3 2024 as it did in losses caused by a major hurricane in the U.S. (Hurricane Helene), which speaks to the unusually large magnitude of Canadian natural catastrophes,” Morningstar DBRS added.

In its 2025 outlook for the Canadian market, Gallagher Re also underscored the significant impact of major 2024 losses in Canada. The reinsurer reported that “recent catastrophic results created more scrutiny around secondary peril pricing and continuous adjustments to reinsurance retentions, which saw further increases to those programs that hadn’t made the necessary changes in prior years in line with their underlying exposure.”

Shopping around  

Capgemini’s Research Institute also recently released its 2025 outlook for the P&C insurance industry. Among the trends highlighted, the report’s authors focused on customer experience. They noted that “insurers rebuild experiences, journeys, and offers around customers to maximize win rates, cross-selling, and up-sell.”

Capgemini estimates that it costs five times more to acquire a new customer than keeping a current customer. Around 63 per cent of policyholders said they are willing to share more data to secure policy transparency and discounts.

In personal lines, Capgemini reported that more than a quarter (27 per cent) of policyholders switch providers after two years, seeking lower premiums and better coverage. “Insurers should shift their focus from rate hikes to retaining and expanding their existing policyholder base, or business viability will be threatened,” the report advised.

Flood zones 

The remnants of Hurricane Debby that passed through Quebec on August 9 reignited debate over eligibility for the province’s general financial assistance program. Damage caused by sewer backups remains excluded, even though the provincial government had indicated a willingness to revisit this in the days following the storm.

This major disaster also reopened discussions about “like-for-like” reconstruction policies found in insurance contracts. When the same building is repeatedly hit by flooding from heavy rain or overflowing rivers, rebuilding it exactly as before often makes little sense. Insurers could adapt their offerings by providing discounts to policyholders who take steps to mitigate risks.

The long-awaited launch of Canada’s national flood insurance program, initially scheduled for 2025, has been delayed due to the prorogation of Parliament until late March and the likelihood of a federal election in the spring. Following the floods in the Greater Toronto Area and Montreal last summer, the Insurance Bureau of Canada (IBC) repeatedly urged the federal government to move forward with the program.

Many Quebec municipalities and their residents eagerly await the final release of updated floodplain maps. As seen after the May 2023 floods in Baie-Saint-Paul, the inability to secure affordable insurance coverage can force homeowners to demolish their homes and relocate.

Nature or not?  

In a recent blog, the United Nations Office for Disaster Risk Reduction (UNDRR) urged the media to stop using terms like “natural disasters” or “catastrophes.”

To better mitigate damages caused by extreme events, “we must start by acknowledging that there is no such thing as a ‘natural disaster.’ The word ‘natural’ implies that these events are entirely beyond our control, which absolves us of responsibility to prepare and reduce disaster risks,” the UNDRR stated.

In July, a report published by an activist investor group noted that many Canadian insurers remain involved in the oil and gas industry. The contribution of this sector to global warming is no longer a matter of debate. As a spokesperson for the IBC put it, “once a risk becomes predictable, it is no longer insurable.”

Some insurers have defended their climate transition plans, but after the catastrophic summer of 2024 in Canada and the premium hikes that may follow, it remains to be seen whether policyholder and investor pressure will force financial institutions to take further action.

Meanwhile, the World Resources Institute projects that damages tied to extreme weather events will continue to increase as the climate warms. The World Meteorological Organization (WMO) has echoed similar concerns about human health, particularly due to worsening air quality in communities affected by wildfire smoke.

Consolidation  

Large consolidators active in the brokerage network, including Navacord, BrokerLink, and Hub International, continued to expand through acquisitions in 2024, as noted in a recent report. There is no reason to believe this consolidation trend will slow in 2025.

In Quebec, as was the case at the start of 2024, three firms specializing in brokerage or dedicated agency distribution with Intact Insurance, merged at the start of 2025.

It is becoming increasingly difficult for small brokerage firms to secure distribution contracts with certain insurers, who impose volume requirements. As a result, brokers are turning to wholesalers to act as intermediaries with insurers. This trend, reported in the April 2024 edition of Insurance Journal, is expected to continue into 2025.

Industry oversight  

Yves Ouellet was appointed CEO of Quebec’s financial markets regulator, Autorité des marchés financiers, in July 2023 and officially took office at the end of August 2023. Since then, he has not granted any media interviews. Requests for interviews from Insurance Journal Publishing Group’s reporters in the spring and fall of 2024 were declined.

Ouellet delivered a speech at the Autorité’s annual Rendez-vous event on February 12, 2024, where he answered a few questions from a reporter with La Presse. He also attended the Sustainable Finance Summit in mid-May. Beyond that, he has not made any public appearances or speeches before the insurance industry, a stark contrast to his predecessor’s active presence at numerous forums.

Ouellet is scheduled to speak before the Canadian Club of Montreal on June 2, 2025. Until then, our group plans to renew its requests for an interview with the Autorité, as many topics of interest remain, particularly the internal reorganization carried out since the new CEO’s arrival.

Quebec’s Fonds d’indemnisation des services financiers (Financial Services Compensation Fund) continues to accumulate surpluses, even as the indemnities it pays out keep declining. The fund is financed by contributions from certified representatives.

Three proposed regulations affecting the role of claims adjusters and the use of uncertified temporary staff during major disasters were submitted for public consultation in October 2024. Their approval by the Minister of Finance and publication in Quebec’s Gazette officielle are still pending, which will determine whether the consultation process led to changes in the regulations. These updates stem from Bill 30, passed in May 2024.

Among the other changes introduced by Bill 30, the Quebec government announced the end of non-advised distribution of replacement insurance by car dealerships, effective July 1, 2026. Insurers and distribution networks are expected to make announcements on this matter during 2025.

At the Chambre de l’assurance de dommages, there was turnover in the syndic’s office in 2024. The current holder of the position began their duties on December 2. Sébastien Tisserand is now the third person to officially hold this role since May 2022, not counting interim appointments.