Canadian Underwriter

Category: Tech

Are client supplier cyberattacks increasing in Canada?
Nearly two-thirds (65%) of Canadian companies that suffered a cyberattack in the past 12 months indicate a supplier was involved, according to research from business insurer QBE. That’s up from 58% last year.

In Canada, 57% of businesses experienced one or more cyber events over the past 12 months, slightly higher than last year (53%), QBE Canada says in a press release Tuesday. Among affected businesses, 65% suffered at least one cyberattack that was related to a supplier and 58% experienced revenue loss (up from 51%).

For the study, market research firm Opinium surveyed 400 decision-makers handling IT, administration or insurance at businesses with between 100 and 2,000 employees in Canada. The survey was fielded from March 31 to April 20, 2026. The 2026 global survey covered 15 countries, with a total sample of more than 6,000 businesses.

Canadian Underwriter has heard cyberattacks involving suppliers have been increasing. At the Insurance Brokers Association of Alberta (IBAA) Convention 2026 last week, BOXX Insurance president Jonathan Weekes anticipated this trend would continue. Supply chain or infrastructure-related breaches will increase in Canada as organizations shift toward cloud-based solutions or standardized software platforms to run their business, he says.

And, at its 2025 Insurance Conference in Toronto last November, KPMG said it was seeing more ‘hybrid’ cyberattacks targeting both first and third parties.

Cyber insurance take-up increases

The good news from a cyber insurance perspective is that more Canadian businesses are purchasing cyber coverages. Seventy-two percent now have cyber insurance, compared to 67% last year.

QBE also reports Canadian businesses are taking various steps to safely roll out artificial intelligence (AI) within their operations, from training staff on responsible AI use, to checking data quality or monitoring outputs for bias. However, these businesses worry their vendors might not be taking similar measures. Indeed, 63% of Canadian businesses are concerned about potential risks arising from how their suppliers use AI.

“AI risk doesn’t stop at the internal perimeter,” Kyle Gray, underwriter team lead at QBE Canada, says in the release. “Organizations need the same level of discipline and oversight across their third-party ecosystem, because weaknesses in the supply chain can quickly become risks to the business itself.”

To mitigate third-party vulnerabilities, QBE suggests businesses should:

Implement strong identity and access management (IAM) protocols, which control who can access technology resources and what they’re allowed to do once granted access

Run regular configuration audits

Encrypt sensitive data across all cloud environments

Evaluate the security posture of third-party providers

Establish clear protocols for managing supply chain exposure.

Emerging AI threat

According to QBE’s research, one in three Canadian businesses (33%) also experienced cyber incidents in the past 12 months that they believed leveraged AI, with phishing among the most frequent methods.

And 16% of polled Canadian businesses experienced a cyber event in the last 12 months that resulted in business interruption of one working day or more (down from 18% in last year’s study).

The research found two in three respondents (65%) are concerned about cyber threats their business may experience over the next 12 months, a smaller proportion than last year (78%), but still prompting investment.

Most Canadian businesses say their IT cybersecurity budget is going to increase over the coming year (31% say these investments will be in line with inflation and 31% say it will exceed the inflation rate). More than eight in 10 (83%) have an incident response plan, up from 79% in last-year’s survey.

AI is becoming ubiquitous in the Canadian economy, with 97% of businesses using it (83%) in 2026 or looking into using it (14%), up from 94% last year.

Increasing operational efficiency and productivity are among the top motivations for deploying AI, with more than half of businesses rolling out the technology mentioning these objectives.

“As new technologies such as AI become embedded in operations, effective risk management remains fundamental to ensuring sustainable and resilient growth,” Gray says.
May 19, 2026
Is insurance facing its Napster moment?

Artificial intelligence (AI) is the canary in the coal mine for the insurance industry, and the industry needs to prepare for what’s coming, speakers said May 11 at Insurance Brokers Association of Alberta’s Convention 2026 in Banff.

“This is the insurance Napster moment,” says Pete Tessier, president of MGA Taycon Risk and the Canadian Association of Managing General Agents (CAMGA), referring to the music sharing service that faced a copyright infringement lawsuit and was shut down in 2001.

“All of you in your offices have clients, that’s your music library,” Tessier says while moderating a Carrier CEO Panel at the conference. “You’re going to have to decide if you’re going to let AI come and take it from you, or if you’re going to own the AI and the technology.

“That’s the mistake the music industry made, and now they give away a million streams, and they get 12 cents for it.”

As an example, Tessier says he helped build an AI underwriting assistant, which took 28 minutes and could compare inspection reports against submission forms to see what was accurate.

“And if you put your heads in the sand and ignore it, there are going to be changes that you don’t want happening,” Tessier says. “It’s coming…it scares me a lot, because I don’t think we get the wave of this…”

Number 1 topic

Evan Johnston, president and CEO of Wawanesa, says he was in Europe about two weeks ago, talking to approximately 20 insurance company CEOs about what was happening in the industry and what we could probably expect to see in Canada. The topics ranged from talent to climate change and others, but the Number 1 topic was AI, Johnston says.

“It’s very clear to me that AI is going to change this industry, and it’s certainly going to change our organization,” Johnston says. “And when I talked to that group of leaders…there were some that were way ahead of us [and] some that were completely denying that this was happening.”

He adds Wawanesa hasn’t really used AI to “change customer experience, but that’s coming.

“The examples and the models that we saw just completely blew my mind,” Johnston says. “So to deny this is going to change our industry, I think, is negligent.”

Louis Gagnon, CEO of Canada for Intact Financial Corporation, recommends the industry use AI as much as possible — “test it, call places where you know that they’re using AI, look at what they do, how they do it, if the experience is good or the experience is not good…

“Ask your accountant to do a little exercise on how much he’s going to charge you, and do it on AI to see what’s the outcome,” Gagnon says. “And I’m not teasing here.”

Full transformation

Within five years, Gagnon predicts AI will transform the ways consumers are shopping. It will also transform the industry through claims and broker relationships, as well as provide industry professionals a chance to spend more time on value-added activity, he suggests.

“I think it’s also going to cut jobs,” Gagnon says. “I think it’s going to reduce the number of people in [an] organization…and it’s going to transform the workforce.

“So, I really think we cannot put our head in the sand and just think that, ‘Well, we’re going to be okay. Things are going to be a bit different. We’re going to be better,’” he says. “I think it’s going to be a bigger change than that.

“So, I think it’s fundamental that we test it, we try it, we play with it, and we try to see in our business where we can implement it,” Gagnon says, adding that some things will go wrong with AI.

“I also think that people in general are going to be very hungry and thirsty for human contacts,” he says. “They are going to be very, very happy to talk to people, to shake hands, to [look] people in the eyes. There’s going to be also that aspect that will not go away.”

Nav Dhillon, CEO of Aviva Canada, agrees the relationship element of insurance will not disappear.

“When a customer has just gone [through] a devastating event and wants to talk to somebody and ensure that their most-loved possessions are back with them or their home [is] rebuilt, [that] won’t go away.”

Dhillon also doesn’t see an end of the industry because of the core purpose of insurance — to help get people back on track.

“This industry has been around for centuries,” he says. “Aviva has been around for over 325 years. It will be around for another 325 or more.”

May 15, 2026
TD Insurance releases client-facing chatbot

Earlier this month, TD Insurance released its first client-facing generative AI chatbot, the TDI Virtual Assistant, to help clients find answers through natural-language conversations.

The virtual assistant retrieves and summarizes information from the TD Insurance website for home, auto and small business insurance to answer general insurance queries. In a conversational tone, it can answer questions on topics such as accident benefits coverage and documentation required to obtain car insurance.

TD started with those three lines of business because they have the largest volumes in its insurance segment, said Kristen Gill, vice president and executive journey product owner at TD Insurance. The insurer plans to expand the chatbot to life and health insurance at a later stage.

TDI Virtual Assistant took about a year to build, said Christopher Cooney, vice president of analytics and modelling at TD Insurance. Its development involved the technology solutions team, insurance experts, lawyers, and Layer 6, TD’s AI research and development centre.

Although Layer 6 had experience developing internal tools at TD, building an external-facing AI posed unique challenges, Cooney added. To mitigate the risk of hallucinations, the chatbot uses retrieval-augmented generation technology, an AI framework that improves large language model accuracy by retrieving data only from trusted content libraries. In this case, TDI Virtual Assistant can only reference material already on TDI’s website.

Another guardrail was to get the tone of voice right when interacting with customers, Cooney said. Users can tell TDI what’s working and not working by clicking the thumbs up or down feedback icon on the chatbot’s responses.

Also in the news: What U.S. budget cuts mean for NatCat forecasts

In its early days, humans will closely monitor the chatbot’s performance to ensure it comes up with satisfactory answers, Gill said. But the goal is to move to machine-assisted monitoring, in which AI helps humans supervise the AI chatbot.

For now, the chatbot is unauthenticated, meaning users don’t need to log in, so it can only answer general queries, Gill explained. If customers need more personalized advice, such as updating their policy details, the chatbot will encourage them to call for assistance.

Eventually, TDI intends to provide an authenticated chatbot service, allowing customers to get personalized advice, Gill said. The technology is still in its infancy, and the insurer’s compliance department is exploring what kinds of changes AI would be allowed to make from a regulatory perspective.

In the future, other client-facing AI applications could include using natural language to help a customer obtain insurance quotes and report claims, Gill added. “We will want to build that capability with the right processes and guardrails and controls to make sure that customer information is safe.”

Special to Canadian Underwriter from Jonathan Got, a reporter with Advisor.ca and Investment Executive.

May 15, 2026
‘Right now means right now:’ How urgency reshapes broker workflows

For brokers, urgency used to mean the occasional last-minute vehicle pickup or same-day home closing. Now, many say it defines the entire workday.

“Right now means right now,” said Pak Selvarajah, registered insurance broker at My Insurance Broker, describing the growing number of same-day requests brokers are navigating daily.

Brokers say the workflow itself has changed. Once a more linear process — handling renewals, quoting new business, and servicing clients in sequence — the workflow is now a constant state of triage. Urgent requests, remarkets, underwriting timelines, and client demands are all competing for immediate attention.

As workloads increase, brokers are rethinking how they organize and prioritize their workdays.

Selvarajah says he now relies on multiple systems to manage volume, including calendars, CRM software, and manual task lists to keep urgent files from slipping through the cracks.

“Two years ago, maybe I had five things to do today,” Selvarajah said. “Now I have 15 things on my list.”

That pressure is changing how brokers approach client service.

“Speed is a factor,” Selvarajah said. “But now I’m trying to look at what’s actually going on and how we can help the client.”

Heavy workloads also strain operational processes, thereby changing the relationship between brokers, underwriters, and technology providers — particularly in cyber insurance, where response expectations and threat environments continue to accelerate.

Also in the news: How Intact expects auto reforms in Alberta and Ontario to change its bottom line

“People have an expectation now to get responses quicker on a variety of levels,” said Erik Tifft, global head of underwriting at Boxx Insurance, a cyber specialist.

That expectation forces insurers and MGAs to rethink underwriting workflows.

“It’s less about prioritizing the urgent from the non-urgent,” Tifft said. “It’s about treating everything as urgent and using technology to make us faster and more efficient.”

Increasingly, that means relying on AI models, automated underwriting logic, and threat intelligence systems to rapidly process straightforward submissions while escalating more complex risks for human review.

“It’s not sequential anymore,” said Neal Jardine, Boxx’s chief claims and cyber intelligence officer. “It’s stacking.”

Rather than moving submissions step-by-step through underwriting, pricing, and intelligence reviews, multiple assessments now happen simultaneously to accelerate turnaround times without weakening risk analysis.

The goal, Jardine says, is not necessarily to reduce pressure, but to change where human expertise is applied.

“AI is not going to reduce the pressure,” he said. “It’s going to change the pressure and allow you to focus on the areas that you truly add value.”

But Boxx executives say the next competitive advantage will not simply be speed.

“The next phase of the market isn’t necessarily about who’s going to do it the fastest, but who’s going to do it the smartest,” Jardine said.

May 11, 2026
Why so few P&C insurers globally are successfully scaling AI
Property and casualty insurance organizations throughout the world are leaving money on the table by narrowly using AI to create “efficiencies” without fundamentally changing the human-centric processes that prevents them from scaling AI, a new global report says.

“AI strategies that mainly focus on efficiency create natural pressure for near‑term returns,” says the CapGemini report, The intelligence era in P&C, released this week.

“According to our analysis of the top 20 [global] P&C insurers, ranked by gross written premiums earned (S&P Global, 2025), only 35% explicitly link their AI strategy to business outcomes beyond efficiency.”

The report highlights a small group of intelligence trailblazers, roughly 10% of insurers, that are using AI to the best competitive advantage. Compared to their P&C insurance industry peers, these organizations have increased revenue growth by 21% and have bumped up their share prices by 51% over a three‑year period.

“These organizations outperform peers on revenue growth and share price performance by treating AI as a core operating capability, not just a technology initiative,” the report states.

P&C organizations need to change in three ways simultaneously to make the most out of AI, the report notes. They need to make technological changes, address talent changes, and also make operational changes.

Changing tech

Most organizations are focussing simply on the tech side, the report says.

“Insurers’ spending patterns make the challenge clear,” the report states. “On average, 72% of AI investments go toward technology and infrastructure, and only 28% to change management.

“That imbalance leaves many programs short of the organizational support required to move from pilots to full‑scale implementation.”

Changing talent and roles

It’s not just a matter of installing the AI, accessing and capturing unstructured data, and developing the data sets required for AI analysis, CapGemini notes. To make AI a core operating capability, companies must address talent and operational gaps as well.

For example, many agree only human experts can make judgment calls about an appropriate use of AI. This is what CapGemini describes as an “expert‑centric P&C insurer.” And they include “orchestration managers,” who translate business strategy into AI principles and govern how intelligence scales across the organization.

Without these types of experts, AI isn’t scaled. “But with them, [AI systems] become coherent, well‑governed systems.”

In addition to orchestration managers, three other types of leadership are required, says the report:

Executive leadership sets guardrails

Human subject matter experts such as underwriters, claims specialists, and distribution specialists define outcomes and establish the accreditation frameworks AI must meet before they’re trusted to act

Experts who handle situations when high‑volume work gets escalated, and complexity exceeds defined thresholds.

Collaboration between these experts across various departments in an organization remains a work in progress, CapGemini says.

“Changing how work gets done remains the central challenge, even for those already ahead on strategy, technology, and adoption,” the report says. “Forty-nine percent of employee time is spent on cross‑team collaboration, yet most AI tools operate at the individual task level, automating work after decisions are made rather than shaping those decisions.”

Ideally, AI would give executive and team members real-time access to data they need to shape strategic decisions, the report says.

To do this, a company will need to shift its focus from using only structured data to unstructured data. But only 12% of insurers reported high maturity in data readiness.

Changing operations and process design

Finally, insurers need to change their operations to incorporate the introduction of AI.

“AI has been added to workflows built for humans, including sequencing, handoffs, and decision points, none of which were originally intended to incorporate AI,” the report states.

On top of that, insurers need to address their workers’ suspicions about AI.

“Forty-three percent of employees cite job security as one of their top concerns about AI, and 25% worry that the transition to AI will increase rather than reduce their workload,” the report says. “Employees navigating genuine uncertainty about their future are unlikely to lean into a technology they associate with displacement.

“Until insurers address process design and the trust deficit together, transformation will remain out of reach.”
May 8, 2026
Navacord brokerage expands commercial platform ambitions
Navacord brokerage Jones DesLauriers Insurance Management Inc. (JDIMI) has announced a strategic partnership with Valebrook Family Office Inc. to support the growth and expansion of a commercial insurance platform across North America.

Valebrook is a multi-family office providing strategic advisory, capital solutions, and operating expertise to ultra-high-net-worth families, entrepreneurs, and institutions, JDIMI says in a press release Monday.

“Founded in Toronto, Valebrook is focused initially on Canada and Florida,” the company says on its website.

The deal became effective Apr. 1. “The partnership brings together Valebrook’s advisory-driven approach and strong client relationships with Navacord’s national brokerage capabilities, creating a platform positioned to deliver comprehensive insurance and risk solutions to business owners and enterprises,” Navacord says.

The collaboration is focused on building long-term client relationships and delivering tailored risk management solutions across key sectors including real estate, construction, manufacturing, and logistics.

Navacord says the deal reflects “a broader industry shift toward integrated advisory and risk solutions, as clients increasingly seek coordinated guidance across insurance, capital, and strategic planning.”

With more than 5,000 industry professionals and 150+ offices in Canada, Navacord delivers expert advice and tailored solutions in commercial and personal insurance, travel and specialty, group benefits, retirement, and financial planning.

Last November, Navacord began transitioning its broker partners to operate under a unified, national brand, although some legacy brands remain in transition. The rebranding process brought six broker partners under the Navacord banner:

Waypoint Insurance Services and Waypoint Benefits & Financial Services

Seafirst Insurance Brokers

Lloyd Sadd Insurance Brokers and Lloyd Sadd Consulting

Iridium Risk Services

Ives Insurance Brokers

Insurance Store.

Over the years, Navacord and its broker partners have made numerous deals, including a mega-merger in February between Navacord Corp. and Acera Insurance Services Ltd.

Combined, the two brokerages will place $7.2 billion in insurance and employee benefits premium and have $7.5 billion in retirement assets under management. Familiarity, scale, geographic diversity and product mix all played a role in the deal, the brokerages told Canadian Underwriter in February.

The two brokerages will work under their own brands until November and then will come under the Navacord banner, said Navacord president and CEO Shawn DeSantis and executive chairman T. Marshall Sadd.
May 7, 2026
Canadian insurtech launches insurance shopping app within ChatGPT

Insurtech MyChoice Financial, Inc. has launched an auto and life insurance shopping application within ChatGPT, enabling users to explore the two types of insurance through a conversational interface.

MyChoice says it is the first company in Canada to offer such an app. It comes as insurers and insurtechs begin exploring how conversational AI can support customer acquisition and engagement, the insurtech says in a blog post Friday.

By the end of May, MyChoice expects to expand the app capability to include home insurance. It’s also planning to launch its life insurance app in the United States.

As it stands, the application allows users to provide personal and coverage information through natural language prompts and receive tailored insurance options within minutes. Customers then continue the process through MyChoice’s existing digital platform to complete their purchase.

The app is designed to complement existing distribution channels — including direct, broker, and aggregator models — by introducing a new entry point for consumers increasingly using AI-powered tools. “It reflects a broader shift toward agent-driven experiences, where early-stage decision-making can begin through conversation before transitioning into structured purchase flows.”

For an auto quote, the app asks for a variety of details, including, among things: postal code, vehicle year/make/model, driver age and gender, licence type, and whether the driver had a licence before anywhere other than Canada or the U.S. It then compares options from multiple insurers and provides an estimated quote.

Leveraging advancements in MCP

The app leverages advancements in Model Context Protocol (MCP) architecture, enabling flexible, model-agnostic integrations and deeper connectivity between conversational interfaces and underwriting workflows, as MyChoice explains.

“Right now, finding these AI capabilities is exactly like the early days of the internet when we relied on web directories before search engines,” says Aren Mirzaian, CEO and co-founder of MyChoice. “But what happens when Google starts natively indexing these MCPs or their own protocol?

“When MCPs are natively indexed, your favourite foundational model will instinctively find and rank the best headless apps to execute a workflow,” he says, referring to an application that separates the front end (what users see) from the back end (which hold data and logic). “In today’s age, where code is commoditized, the winners will be the ones who have the deep quote-to-bind infrastructure, not the pureplay AI tools.

“The front end is just what people are interacting with right now,” Mirzaian adds. “Agentic AI is the new buzzword, but all it really means is an AI interacting with your APIs or using a browser instead of a human interacting with your front end.”

MyChoice says it has been experimenting with conversational insurance interfaces for “quite some time,” having launched a conversational life insurance quoting tool as a custom GPT as early as July 2024. “However, the advent of…MCP has enabled us to create experiences that are truly model-agnostic and to lay the groundwork for deeper funnel penetration with this emerging customer acquisition and engagement channel.”

May 4, 2026
Why AI won’t replace human claims adjusters

Claims surges caused by natural catastrophes (NatCats) or other major events create bottlenecks for insurance claims adjusters. And that’s where manual work processes can collapse.

That has some firms developing artificial intelligence (AI) agents and other options to take up slack by triaging clients – freeing human adjusters to help people who are in genuine distress, say two authors of a recent Deloitte report on property and casualty (P&C) insurance claims trends.

“Automation scales. So, you’re able to have those conversations about your claim, and [it] removes a lot of that administration that bogs [processes] down when there’s a surge event,” says Colin Asselstine, a director and insurance claims leader at Deloitte.

A lot of claims-related AI development centres on creating engines to do data validation, policy and coverage checks, triage, routing, document ingestion, classification, summation, notification and status updates.

“Those are all really good candidates for automation,” Asselstine tells Canadian Underwriter. “It allows you to protect the customer experience, make sure your operations [are] resilient. You give back to the customer that really needs your support.”

Related: AI is shrinking the pool for junior hires. Is apprenticeship drying up, too?

But automation also must react to the claim type.

Chris Duvinage, a partner and national P&C insurance segment leader at Deloitte, notes that while NatCat damage is often property-specific, that’s not always the case.

“The second you have some element of bodily injury, [the person wants to] talk to somebody. So just because you can technically automate that process [using] AI…it doesn’t mean it’s [always advisable],” he tells CU.

Adoption of AI will, though, create different work and training needs for adjusters’ workforces.

“You don’t want to move away from the existing contact centers,” says Duvinage. “In fact, you may want to train your people to be even more empathetic…around some of the people skills and take the…lower-value work like data entry, and copy and pasting between systems away from them so they can truly focus on [clients] in the moment, rather than trying to solve back-end systems and processes.”

Adds Asselstine, “You want them to look at complex coverage, complex liabilities. Look at escalations, negotiations. That’s where humans are effective, and that’s where [AI] is pushing towards using our skill sets as humans.”

Which is why adjusters, particularly older workers, shouldn’t be afraid of losing their jobs.

“From an age perspective…it’s those folks with the experience that can be more empathetic; that have a solution on the phone and are…better-trained to have some of the customer-facing conversations,” says Duvinage.

Related: Why claims pros see an influx of fire claims during deep freezes

The best adjusters help customers understand their post-NatCat-event status and can explain complex insurance processes so that clients understand their next steps, says Asselstine.

“Depending on the claim, there’s a lot of that empathy and the trust and feeling…for a customer when they’re under stress – and being able to relate to tell [them that] everything [will] be okay. That’s true today. That will be true tomorrow,” he tells CU.

Adjusting firms, insurance companies, and some brokers must also prepare for how AI augmentation will help both veterans and new hires improve work processes. Those who get comfortable working alongside AI tools will benefit from their ability to do tasks like summarizing documents and even providing suggestions for next steps.

“It’ll listen to a conversation. It’ll take a summary of that. It’ll pull up the policy. It’ll pull up your internal standard operating procedures (SOP), and say, ‘Based off what I heard, I think these are [the] relevant areas of [the] policy, and this is the relevant area of our SOP,’” Asselstine says.

“It’s [giving] suggestions for humans to then validate. When the guardrails are up [around AI] and insurers get comfortable that 99.99% of time the model is giving the right answer, you can then say, ‘For these simple claims I’m good with the model making the decision.’”

May 1, 2026
What P&C insurers can expect from OSFI next year
Cyber preparedness features prominently in the supervisory strategy of Canada’s solvency regulator for the 2026-27 fiscal year.

The Office of the Superintendent of Financial Institutions (OSFI) released its Annual Risk Outlook last week. Among its insurance priorities for 2026-27 is “conducting targeted supervisory work on cyber preparedness and third-party risk related to critical outsourced operations.”

Third-party cyber risk remains a concern for Canadian businesses, according to research commissioned by commercial insurer QBE Canada last June.

More than half of Canadian businesses (53%) have experienced a cyber event in the past 12 months, QBE’s study found. Fifty-eight percent of those businesses said the events were supply chain- or vendor-related cyberattacks. QBE Canada’s survey included 400 IT departments in Canadian businesses.

For selected property and casualty insurers, OSFI says it will conduct thematic monitoring of cyber insurance underwriting and the emerging coverage of artificial intelligence.

“For selected insurers, we plan to conduct targeted cyber and technology risk reviews as well as ongoing monitoring of business integration and risk oversight of AI,” the regulator says in the report. “We will continue our intelligence-led cyber resilience testing for large insurers.

“For all insurers, we will review their response to cyber incidents and assess their cyber preparedness.”

Malicious cyber activities remain a “significant and evolving threat” to the financial sector and its critical service partners, OSFI notes in its annual risk outlook.

“Reported incidents demonstrate the growing sophistication of threat actors leveraging advanced and AI-enabled tools, which increase both the speed and scale at which cyber threats can materialize,” the regulator says. “Software vulnerabilities in common and required technology are expected to remain the most persistent and high-impact technology risk.”

For 2026-27, OSFI’s other two insurance priorities include a focus on ensuring carriers maintain resilience and sound risk management by:

evaluating insurers’ responses to market volatility, including oversight of investment, liquidity, and policyholder behaviour risks, and

assessing boards’ effectiveness in overseeing the risk appetite framework and alignment to insurers’ strategy as well as financial and capital plans

Continued resilience

For the insurance industry as whole, OSFI says Canada’s federally regulated insurers continue to demonstrate resilience amid persistent structural and cyclical pressures.

“The operating environment remains characterized by geopolitical uncertainty, elevated integrity and security risks, rapid technological change, and ongoing catastrophe-related losses,” the report says. “Competitive forces are accelerating shifts in operating and distribution models, as well as inorganic growth strategies, contributing to increased execution risks.”

Investment risks also remain elevated, OSFI says, reflecting continued market volatility. “This continues to expose insurers to reinvestment and valuation risk across asset classes. In addition, private market assets are playing a greater role in insurers’ investment portfolios, introducing increased opacity, complexity, and potential illiquidity constraints.”

In particular, P&C insurers face ongoing underwriting pressure, OSFI says. “Claims inflation, particularly in auto insurance, and a softening commercial lines market, test financial and operational soundness.”
April 20, 2026
How AI is directing M&A activity in Canada’s P&C industry

Artificial intelligence explains some of the mergers and acquisitions activity in Canada’s property and casualty industry, a member of Swiss Re’s board of directors, Karen Gavan, said in Toronto Tuesday.

“We know this has to be a business of economy of scale,” Gavan replied, when asked about M&A activity in Canada at the reinsurer’s 40th annual Canadian Insurance Outlook Breakfast. “If you’re going to invest in AI to improve your processes, you have to be big. You can’t afford the investment unless you have scale, so absolutely essential.

“[For] the other part of AI, predictive analytics, you’ve got to have data. And the more data, the richer you are, and so you need both. And so it’s absolutely necessary to have consolidation. But I think…overall, it will be positive for the industry.”

Keynote speaker John Dacey, a former Group CFO of Swiss Re, discussed the importance of insurance companies stepping up to invest in AI. After his talk, Gavan made her remarks about AI investment being a driver of M&A activity in Canada. She was later asked about market concentration, to which she replied Canada still has a lot of room for M&A without disrupting choice for consumers.

“Certainly, going down to one or two companies, it’s not ideal,” she said. “But if we can have a good number of consolidated companies in the five to eight range, it will make a stronger industry.

“From a reinsurance perspective, having everyone consolidated, it’s a little tough for us. But I think it’s better for the Canadian industry if there is that consolidation.”

Dacey said Canadian P&C insurers needed to be aware of four main global influences on Canada: AI, energy costs, global inflation and interest rates, and the rise of private credit.

Speaking about AI specifically, Dacey said Canadian insurers should be thinking about investing in AI solutions “yesterday.”

“On the P&C side, [AI] is more clearly having effect as people think that value chain through,” Dacey said. “Removing human bias from underwriting. Making sure that the most recent data gets put, not just into your models, but your pricing. And most importantly, figuring out ways to bring new data that’s never been utilized for underlying commercial risks in particular, personalized risk maybe, into a price environment.”

P&C insurance companies successfully using AI will see two things happen, Dacey said.

“One, they will avoid some of the worst risks,” he said. “Not all of them, you can never avoid all of them. But you can clean up your portfolio before the experience of a loss.

“And you can also figure out a way to shape prices …to get some of the best risks your competitor has in your portfolio.

“And that combination on the margin, improving your combined ratio by a point, maybe two over time, is worth a lot of money.”

Plus, Dacey added, companies will need to use AI’s predictive analytics to help consumers, and also to help the distribution channel serve customers. Because if they do not, the broker distribution channel will develop AI models themselves.

“If you don’t do that on the distribution side, the intermediaries will also be coming out in front of you. And they’ll be directing risks in ways that benefit them, and who’s making the highest commissions.”

April 14, 2026