Ratehub.ca’s Canadian insurance market predictions for 2025
From inflationary pressures like vehicle theft and severe weather to all the proposed government reforms, here’s what insurance in Canada could look like next year.
Jessica Ho
The insurance industry is no stranger to change – and 2025 is shaping up to be a year of transformation. From ongoing reform discussions in Ontario and Alberta to the persistent challenges of severe weather and vehicle theft, here’s what you can expect in the near future.
A look back at our 2024 predictions
Before diving into what’s ahead for 2025, let’s revisit our insurance predictions from last year (and whether or not we were correct):
Auto insurance predictions for 2024 – Last year, we predicted that car insurance rates would only get worse due to inflationary factors, like stolen vehicle trends, auto insurance fraud, and high repair and replacement costs. We also discussed government reforms that were set for 2024, including Alberta’s rate cap and Ontario’s optional DCPD. Prices have increased year over year, up about 9% from the end of 2024.
Home insurance predictions for 2024 – Similar to auto insurance, we cited that home insurance premiums wouldn’t get much cheaper (due to factors like repair and replacement costs, as well as climate change). We also discussed the government’s plan of action with the National Flood Insurance Program which has yet to be fully rolled out. Prices have increased year over year, up nearly 7% from the end of 2024.
Life insurance predictions for 2024 – With life insurance, we predicted that younger Canadians might delay purchasing policies, that more coverage would be required to offset the rising cost of living, and that digital insurance processes could streamline the buying experience. The industry is having another record-breaking year – year-to-date, new annualized premium totalled $1.5 billion, up 5% from the prior year.
So, did all our predictions hold true? Yes – while there may be nuances, insurance premiums generally rose across the board while governments stepped in, attempting to address rising rates. Additionally, Canadians’ purchasing behaviours continue to be shaped by economic pressures and the evolving digital landscape.
Auto insurance predictions
1. Ontario and Alberta’s auto insurance systems will evolve as governments aim to address rising rates
In 2024, auto insurance in Ontario and Alberta made headlines due to all the government announcements for proposed changes. Here’s a recap of what happened (and what’s to come):
Ontario auto insurance – The Ontario government announced that as of July 2026, all types of accident benefits coverage would become optional – with the exception of medical, rehabilitation, and attendant care coverages. Other benefits, such as lost wages and caregiver expenses, will come at an added expense. The government’s goal is to enable consumer choice, allowing drivers to opt for less coverage in return for a lower premium. However, experts are warning against this approach as it could leave drivers underinsured (leading to even more financial hardships down the line).
Alberta auto insurance – The Alberta government has announced plans to increase the good driver rate cap from 3.7% to 7.5% for the next two years, starting in January 2025. This means that policy renewals for certain drivers that meet a list of requirements will be limited to a hike of 7.5%, instead of last year's 3.7%. While this seemingly looks like a loss for consumers, the good driver rate cap of 3.7% had many implications on the system that were hurting the health of the market and likely to lead to further rate increases for all in the long run. Insurers in Alberta reported significant losses due to the limited opportunities for earnings, with a few even making the drastic decision to pull out of the market entirely – and there is potential for more in 2025.
Along with this cap change, Alberta announced plans to fully transition into a ‘care-first’ no-fault insurance system by 2027. Under this system, drivers won’t be able to sue the responsible parties for injuries but will instead need to seek set compensation rates from their insurer. The goal is to reduce claims costs from litigation while providing victims with more streamlined access to medical benefits. Plus, benefits for medical care, rehabilitation, and income replacement will become more comprehensive. We expect to hear more information about this transformative plan in 2025.
Learn more: How Alberta’s auto insurance reforms aim for change
Drivers in these two provinces face some of the highest auto insurance premiums across Canada. According to the Auto Insurance Rate Board (AIRB), Albertan drivers paid an average rate of $1,669 in 2023. Meanwhile, the average rate in Ontario was $2,006 in October 2024 as reported by the Financial Services Regulatory Authority of Ontario (FSRA).
Our expert's take
"It’s clear that provincial governments are looking to take action to relieve pressure on consumers, but only time will tell if the measures will be effective. In the meantime, as insurers adjust their strategies on pricing and coverage options, you can take proactive measures by consulting a trusted insurance broker for insights on future policy changes."
Morgan Roberts, VP of RH Insurance Brokerage
2. Auto theft will continue to drive insurance premiums up
The stolen vehicle epidemic has eased slightly in 2024 – but not nearly enough for the auto insurance industry to relax. While numbers in the first half of the year were promising, showing a 19% decline in theft claims, the number of claims has still increased by a staggering 138% in the last decade. And when one vehicle is stolen, we all pay for it – in the form of insurance premiums.
Équite Association also recently released its annual list of the top 10 most stolen vehicles in Canada, and the Toyota Highlander took the number one spot. Those who drive highly targeted models will especially be impacted by higher rates – and some insurers have even taken measures into their own hands, adding surcharges for certain drivers who don’t install a system for anti-theft.
For instance, back in 2023, Aviva Canada introduced a $500 surcharge for select high-risk policyholders who refused to install either a TAG or KYCS system. To incentivize customers further, any vehicle with one of these devices qualifies for 20% off comprehensive coverage.
Our expert's take
"Auto theft has been a major topic of conversation for the past few years and the record-breaking statistics justify it. Insurers have taken proactive measures to help curb the impact of auto theft by implementing TAG requirements as part of their insurance process. We expect that the adoption of this technology will only increase across Canada as the early results have looked promising. Don’t be surprised if your insurer has this as a stipulation for insuring your vehicle in 2025."
Matt Hands, VP of Insurance at Ratehub
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Home insurance predictions
3. Demand for the types of property insurance will shift based on housing market trends
Home sales have started to show signs of rebounding in late 2024 due to mortgage rate cuts, and 2025 could potentially be the comeback year for Canada’s real estate market. And as the housing market shifts, so will the demand for property insurance – it’s simple: an increase in homeownership leads to a higher demand for home insurance.
This also means we may see a shift in demand for tenant insurance (and landlord insurance). While homebuying is on the rise, rent prices have been dropping as of late. Rental demand has been down in a tough market and this along with the impact of rate cuts is likely helping to push prices down. One report showed that prices dropped 1.2% in October year-over-year which also marked the first decrease in over three years – this was, however, mainly relevant to major urban centres.
Our expert's take
"We expect a robust home market next year with lots of mortgages up for renewal and market prices being lower – we should see renewed buyer demand. This means the insurance industry needs to be ready for the increased demand for home insurance-related products – whether it be homeowner, condo or tenant insurance. We expect a higher volume of Canadians to be shopping the market for the best rates compared to the previous two years."
Matt Hands, VP of Insurance at Ratehub
4. Insurers will continue to face detrimental losses at the hands of severe weather
The summer of 2024 was a memorable one for the insurance industry – and not in a positive way. According to the Insurance Bureau of Canada, severe weather shattered historic records during the summer, totalling over $7 billion in insured losses. From the Jasper wildfire ($880 million) and Calgary hailstorm ($2.8 billion) to the flooding in both Southern Ontario ($940 million) and Quebec ($2.5 billion), property insurers saw the worst of it.
While it’s clear that any more severe weather incidents in 2025 will cause losses for P&C insurance companies across the board, the question remains as to whether providers will introduce tighter restrictions on coverage. We already saw this happen with flood insurance, as high-risk homeowners have difficulty getting affordable coverage (or any coverage at all). Fire insurance is currently still included in standard home insurance policies – and while California’s restriction on coverage is an interesting case to look at – we don’t anticipate Canadian insurers adopting similar measures so soon.
Our expert's take
"The fallout from another year of significant losses as a result of severe weather events will likely appear in the pricing for home insurance. It won’t be uncommon for Canadians to see higher renewal pricing this year. And while we don’t anticipate any major policy changes or coverage limitations in 2025, it is important to remember that the insurance industry is analyzing how to best move forward with the increased frequency of catastrophic losses. Remember to speak with your broker if you have any concerns about your coverage."
Morgan Roberts, VP of RH Insurance Brokerage
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Life and health insurance predictions
5. Term life insurance will persist in popularity
When it comes to life insurance, Canadians typically choose between two main products: term life and permanent life. And while term life insurance is only a temporary coverage solution, it tends to be a popular product.
According to the Canadian Life & Health Insurance Association (CLHIA), term life products made up 75% of the value of total policies in force, including individual (40%) and group (35%) plans. This is because most Canadians don’t need lifetime coverage or feel that they can’t afford it. Think about your financial obligations as a provider – mortgages and car loans are eventually paid off, and children grow old enough to provide for themselves.
What’s interesting about the market is that permanent life insurance products (including whole life insurance and universal life insurance) are much more expensive. So when looking at the market based on premiums, whole life insurance tends to dominate. We saw this in LIMRA’s most recent quarterly report as the whole life premium took up 68% of the market in Canada year-to-date.
Future trends are expected to remain similar to those of 2024 as the life insurance market has settled down since the pandemic. However, Canadians may opt for increased life insurance coverage as the cost of living continues to rise. We tend to see this trend throughout the years – CLHIA reports 2023’s average household coverage amount to be $483,000, up from 2022’s number of $474,000.
Our expert's take
"The need for life insurance has only heightened since the pandemic, which is reflected in the record-breaking sales numbers for the past four years. The industry is evolving and there are more product options available today than ever before. As Canadians continue to explore new ways to cope with the forecasted cost of living increases and financial planning challenges, life insurance will be a sought-after solution. As reported by the CLHIA, we expect a strong year for sales in 2025 with term life continuing to be the product of choice."
Jeffrey Talor, Director of Sales, CanWise Insurance Services
6. More innovative life insurance solutions will be introduced
With the traditional life insurance underwriting process, a medical exam is typically required, making the process more time-consuming and less accessible. However, as life insurance becomes increasingly relevant for Gen Z and Millennials with different purchasing habits – and as the industry continues to adapt to the digital landscape – we can expect more innovative, simple, and fully online products to emerge. Emma Insurance, for instance, offers a bind online life insurance product that allows customers to secure coverage right away.
Plus, innovation doesn’t necessarily need to be related to digital processes. Just this year, Sun Life launched a life insurance product, designed specifically for diabetics – the first term product of its kind in Canada. While guaranteed-issue policies (or those with no medical exam) offer a viable solution for those with pre-existing conditions, insurers may also create more custom products for specialized groups down the line.
7. Demand for living benefits coverage will continue to grow
Living benefits are specialized life insurance products that cover you while you’re still alive – this includes critical illness insurance (which pays out a lump sum if you’re diagnosed with a covered condition) and disability insurance (which pays our regular benefits if you’re unable to work). They are often added to existing life policies, but they can be purchased individually.
These products are becoming more important as Canadians are not only living longer but working longer. Insurance Business Magazine reports that as Canada’s demographics shift and employers retain older workers, income protection through long-term disability insurance is becoming increasingly necessary. Not only do Canadians need these coverages, but the coverages themselves need to evolve to meet the changing needs of the market.
Our expert's take
"There are many reasons why living benefits are more important now than ever, and demand for these products can be expected to grow as awareness increases. With life expectancy going up, many Canadians may need funds for long-term care down the line. Plus, the country’s public health care system has its limitations, such as long wait times, and a living benefits policy can help you seek international care privately – especially as health issues become more and more prevalent."
Jeffrey Talor, Director of Sales, CanWise Insurance Services
8. An emerging market for individual health and dental insurance will rise if employee benefits become limited
While Canada has a universal health system that’s funded through taxes, not everything is covered. Health insurance – be it from a group policy or an individual policy – helps bridge the gaps for various expenses, such as prescription drugs, dental care, vision care, and mental health support.
Many Canadians have group insurance benefits from employment – CLHIA reports that out of the $60.8 billion in health premiums paid to insurers in 2023, 91% came from group plans (which is up 1% from the previous year).
But what happens when employer-paid plans are limited? HUB International’s 2025 Outlook Report reveals affordability as a key issue, highlighting that coverages will need to be chosen more carefully by employers. Two-thirds of companies say that dealing with the cost of medical benefits will become a big priority next year. If group insurance becomes limited, employees may start looking for individual health insurance options to supplement.
Our expert's take
"We see more demand year over year from consumers interested in benefits products. It is certainly an emerging market driven by the changing health benefits and economic landscape. With new insurance options being built to serve this growing market, we believe this upward trend will continue throughout 2025."
Jeffrey Talor, Director of Sales, CanWise Insurance Services
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Travel insurance predictions
9. Demand for travel insurance will grow as airline troubles persist
We’ve moved past the post-pandemic chaos that plagued the airline industry, but challenges across the board persist. This year, WestJet experienced a strike while Air Canada narrowly avoided one by reaching an agreement. Issues like flight delays and lost baggage remain top concerns for travellers, highlighting a bigger need for travel insurance.
The industry is struggling to keep up with the demands of the consumers. The travel industry is growing at an accelerated rate coming out of the pandemic. The increased demand for travel and tourism is helping to grow the global travel insurance market which currently sits at around USD 22.45 billion and is expected to reach upwards of USD 76.21 billion in 2033 (estimates provided by Brainey Insights). In addition, a recent survey by the Blue Cross revealed that 87% of Canadians recognize the risks of travelling without insurance. It’s a market that is set to burst over the next decade and insurers are evolving their product options to meet the market needs – specifically delivering quick and affordable travel insurance options.
It’s important to note that every travel policy is different – read the terms carefully to ensure the one you choose comes with all the coverages you need. A comprehensive plan typically protects you financially with these three main categories: travel medical insurance, trip interruption and cancellation insurance, as well as baggage insurance. Plus, check any existing coverage you may have first, such as through a travel credit card or group benefits, and then bridge the gaps from there.
Our expert's take
"Canadians are more aware than ever and conditioned to expect issues with travel - especially airline-related travel. Canadian travellers are now proactively seeking out travel insurance options more than ever and this is expected to continue in 2025, as the travel industry continues to struggle with reliability. Affordable trip interruption and cancellation are top of mind for many travellers these days and we plan to help them find these coverages."
Matt Hands, VP of Insurance at Ratehub
Business insurance predictions
10. Cyber insurance policy options will expand as external threats to cyber security for businesses continue to grow
According to the Insurance Bureau of Canada, data breaches are becoming costlier – with the average reaching $6.9 million in 2023. Other evolving risks for the industry include AI, ransomware, and systemic events as businesses become more dependent on technological advancements for everyday operations.
The report highlights that only about 5% of businesses in Canada have cyber insurance – a commercial insurance product that protects businesses financially from a wide range of digital threats – showing a large opportunity for the market to expand. Premiums have already increased from $15 million to $550 million from 2018 to 2023, and it’s clear that more growth can be expected in the coming years.
Our expert's take
"Having an online presence is great for growing a business, but it also comes with increased risks, especially if your business has an online e-commerce solution or accounts experience. The risks of a data breach are higher than ever and the cost to a business's bottom line can be significant. The need for cyber insurance is growing and the product is evolving to meet the risks of the market. We expect the cyber insurance market share to grow year over year, but we also expect the cost of this insurance to increase as insurance companies begin to account for the increased frequency and cost of these cyber security breaches."
Matt Hands, VP of Insurance at Ratehub
Overall insurance industry predictions
11. Insurance premiums will continue to rise across the board
This one’s a given, but insurance premiums are only expected to rise at the hands of inflation. From our previous predictions – including the persistence of car theft, severe weather, and high costs of living – it’s clear that insurance companies will need to make money back somewhere for the increasing cost of claims. And that ‘somewhere’ will come in the form of insurance premiums from consumers.
For reference, the most recent Applied Rating Index Report reveals that premiums for personal auto insurance in Canada grew by 12.2% year-over-year as of Q3 in 2024. And when compared to Q1 of 2021, premiums increased by 31.1%. Personal property insurance rates saw notable increases too – at 7.7% and 24.5%, respectively.
Our expert's take
"The industry is coping with record payouts across the board and new risks are emerging each year that challenge the status quo. Add in the current economic challenges to complicate matters further, and this all boils up to increased pricing for almost all insurance product offerings out there. Not everything is increasing at the same rate, but we do expect that Canadians will most likely pay more for their insurance needs in 2025."
Matt Hands, VP of Insurance at Ratehub
12. Insurance online shopping will continue to grow
The good news is that consumers can take matters into their own hands and shop the market for cheaper rates – and growth for insurance online shopping can be expected. According to Semrush data, the term ‘car insurance quotes’ has a monthly online search volume of 18,100 in Canada as of December 2024 – a stark increase from 14,800 searches just one year ago. And ‘home insurance quotes’ also saw a notable increase, jumping from 2,300 to 2,900 monthly searches.
If you live in one of the public auto insurance provinces – including Ontario, Alberta, and Atlantic Canada – you can take advantage of the free market system, instead of settling for the first rate you come across. And the same goes for anyone looking for home insurance, life insurance, travel insurance, and business insurance across the country. Comparing quotes across all different providers can help you save hundreds of dollars throughout the year, in just a few minutes.
Our expert's take
"Whether it is survey data or online search trends, there is a clear pattern in the growth of the online insurance market. More insurance companies are developing solutions to directly serve the changing behaviour of today’s consumers than ever before. There is a new consumer market emerging and they want access to products and information at their fingertips – the need for more innovative digital solutions is only growing and will continue throughout 2025. Insurtech is poised for another strong year."
Matt Hands, VP of Insurance at Ratehub
The bottom line
As the insurance industry continues to evolve next year, it’s important to stay informed about the changes so you can make the best financial decisions for yourself. Keep up with new regulations, trends, and products – while ensuring you get the coverage you need at the best rate on the market.