Ratehub.ca’s insurance predictions for 2026
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.
Alyssa Prizzon, Content Marketing Strategist
The insurance industry is constantly evolving, and 2026 is predicted to bring changes. From new auto reform in Ontario to the continuous challenges of severe weather and AI’s role in insurance, here’s what we predict the New Year will look like.
2026 auto insurance predictions
1. Ontario’s new auto reform will lead to friction and confusion in the province
In October 2025, the FSRA announced changes to Ontario’s auto insurance reform that go into effect on July 1, 2026. The changes revolve around offering more choice for drivers, including making all accident benefits (excluding standard medical, rehabilitation and attendant care) optional. While these changes are intended to make Ontario car insurance more personalized, we predict they will leave many drivers underinsured, as some insured drivers may prioritize potential premium savings over their true coverage needs.
Our expert's take
“This new reform in Ontario will spark confusion and friction among drivers, as many may be unfamiliar with or misunderstand what the optional accident benefit coverages actually offer. It’s expected that some drivers will drop essential benefits protection to save money, while others will rely on their brokers for guidance.”
Morgan Roberts, VP of RH Insurance Brokerage
2. Alberta’s good driver rate cap will continue to strain the auto insurance market
Alberta’s good driver rate cap is set at 7.5% until 2026, limiting insurance companies from increasing premiums past 7.5% for any person deemed a ‘good driver’. While this initiative is positioned as a positive for Alberta drivers, it has led many insurance companies to either limit coverage availability or leave the market entirely due to unprofitability. If more providers exit the market due to the inability to price insurance accordingly, options for securing car insurance in Alberta are likely to become increasingly limited, making it more challenging for drivers to find the coverage they need at an affordable rate.
The province is also set to introduce the ‘Care-First’ system in January 2027. So many carriers are taking a wait-and-see approach before making any significant decisions regarding their future in the market. With numerous market forces at odds, it’s certainly a difficult time to be a driver in Alberta.
Our expert's take
“The good driver rate cap is having an inverse effect on the Alberta auto insurance market. Preventing price increases is making the conditions right for more insurers to exit the market or limit their coverage. A limited number of providers in the province will ultimately diminish the benefits of shopping in a private marketplace for Albertans, as there are fewer affordable car insurance options available to drivers.”
Matt Hands, VP of Insurance at Ratehub
3. Higher costs of auto theft claims will continue to lead to increased premiums
Although auto theft rates decreased by 19.1% in the first half of 2025, we predict that higher costs of insurance claims (due to inflation) will ultimately drive up premiums. While we expect theft rates to continue to decline, we don’t anticipate them falling below pre-pandemic levels. As a result, insurers will continue increasing rates to help offset the cost of these expensive claims.
Also read: What is the total cost of auto theft in Canada?
Our expert's take
“Lower theft rates in the country have helped mitigate rising insurance costs to an extent, but the current rate of theft reduction hasn’t fully offset the rising cost of theft-related claims. As vehicles and their associated parts and labour continue to get more expensive, insurers will continue to face a steep financial challenge due to theft.”
Matt Hands, VP of Insurance at Ratehub
2026 home insurance predictions
4. Insurers will face another difficult year of detrimental losses at the hands of severe weather
Severe weather in Canada continues to be as unpredictable as it is frequent and disastrous. As of September 2025, insured losses from severe weather totalled $1.6 billion. Nearly $120 million of that damage was caused by flash flooding in Montreal and other parts of Quebec. When it comes to wildfires, Statistics Canada reports that 2025 may be one of the worst seasons yet, with 3,582 wildfires recorded since the beginning of the year as of July 2025.
The total cost claims are astronomical – 2025 is expected to exceed $2 billion in insured losses, and we predict that 2026 will unfortunately follow a similar trend. With compounding years of billion-dollar losses and expected increases in claim costs in 2026, we expect home insurance premiums to rise again for policyholders.
The Insurance Bureau of Canada (IBC) continues to call on governments to take action against severe weather by not building new homes in high-risk areas and addressing labour shortages. A new report from Ontario Construction News highlights that labour shortages in residential construction are impacting home insurance rates because it takes longer and costs more to repair or rebuild homes after a disaster. This increases claims costs and ultimately trickles down to premiums for Canadians.
While the 2025 Federal Budget did outline an initiative to strengthen Canada’s emergency management, funding $257.6 million over four years (starting in 2026-2027) to boost wildfire-fighting capacity, there was no mention of the National Flood Insurance Plan.
Our expert's take
“Supply and demand in housing and construction directly affect home insurance premiums. Extended timelines for repairing or rebuilding homes after natural disasters mean benefits such as additional living expenses are likely to be exhausted faster than in previous years. Several factors contribute to insurance price increases, including labour and material shortages and inflation. Furthermore, when entire communities are impacted all at once, the timeline to process claims stretches even further, ultimately costing the industry more.”
Morgan Roberts - VP of RH Insurance Brokerage
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2026 life insurance predictions
5. Canadians will choose shorter-term coverage and budget-friendly policies
Rising living costs and affordability concerns will lead more Canadians to purchase shorter-term, lower-cost life insurance policies in 2026. A recent BlueCross study shows that 89% of Canadians recognize the value of securing life insurance in their twenties, yet many cite cost as a reason for not having coverage. That is especially true for younger generations, such as Gen Z and Millennials.
In 2025, Ratehub.ca users opted for smaller policy values, a trend we predict will continue in the New Year. Smaller, short-term policies typically appeal to individuals who want coverage without breaking the bank. It’s better to have some coverage than no coverage at all.
Our expert's take
“The life insurance market typically follows the mortgage market. If we see more home purchases in 2026, life insurance purchases will likely follow suit. However, if economic factors such as U.S. tariffs and high interest rates persist, the trend toward smaller policies is expected to remain the popular choice among Canadians.”
Jeffrey Talor, Managing Director of Life & Sickness Brokerage
6. The demand for living benefits will trend upwards
Living benefits coverage, such as critical illness and disability insurance, is an emerging market we predict will become more appealing in 2026. These types of insurance options are becoming the most important coverage to carry going forward – especially as people live longer and are more likely to live with an illness. Many insurance companies are also investing in ways to make living benefits more affordable and accessible. For example, in 2024, SunLife launched a Term Insurance for Diabetes program, and BlueCross launched a digital-first solution for term life and critical illness insurance, making it faster and easier to secure coverage.
Additionally, workplace benefits are often not enough to rely on and generally won’t stay with you for life. As a result, we believe the number of Canadians seeking personal benefits coverage will continue to rise as they look to purchase individual policies to fill their coverage gaps. The same goes for health and dental insurance.
Our expert's take
“Purchasing private critical illness and disability insurance policies offers Canadians key advantages, including the option to convert to long-term care (depending on the provider). Relying on workplace benefits can be limiting, as they typically don’t offer conversion options and expire upon retirement or departure from the company. Individual policies provide the most protection while filling coverage gaps.”
Jeffrey Talor, Managing Director of Life & Sickness Brokerage
7. Demand for life & benefits coverage is met with slower approval rates
Over the past year, we’ve noticed that life insurance policy approval rates have been declining and that processing times have become longer. It’s possible this trend could continue in 2026, making securing coverage more time-consuming. For Canadians applying for life insurance, patience is key. Working with a broker can help you better understand market trends, place you with multiple products and shop the market to give you the best chance of finding coverage.
Our expert's take
“As product demand and diversity grow, and market risks change, insurance companies need to react accordingly. Unfortunately, for progress to occur, the industry sometimes needs to slow down first to catch up. Insurance is all about risk mitigation, and while the entire industry is hungry to evolve to meet the new digital marketplace demands, it needs to do so in a controlled manner. This slowdown is not expected to persist for years to come.”
Matt Hands, VP of Insurance at Ratehub
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2026 travel insurance predictions
8. Demand for travel insurance will grow as airline troubles persist
Travel disruptions in 2025, including the Air Canada strike and U.S. government shutdown, have made it clear to Canadians that planning ahead is essential when flying. A 2025 BlueCross survey reveals that 51% of Canadians are more likely to purchase travel insurance than in the past. We predict this trend will continue in 2026, with more Canadians purchasing individual travel insurance policies to protect against losses airlines won’t cover, like non-refundable hotel expenses.
Our expert's take
“Purchasing a travel insurance policy that’s separate from airline or credit card coverage is becoming increasingly important for Canadians. The frequency of travel delays means lots of travellers are losing out on non-refundable parts of their trips. With a travel insurance policy, you give yourself the best chance to receive money back for all parts of your disrupted vacation plans.”
Matt Hands, VP of Insurance at Ratehub
Overall 2026 insurance industry predictions
9. Premiums will rise across Canada due to inflation and the U.S. tariffs
A large part of 2025 was spent discussing the U.S. tariffs and their impact on Canada’s economy. When it comes to insurance, the general sentiment was that price increases will be delayed until policy renewal. If your policy has renewed recently, you may already have seen an increase; however, for many Canadians, 2026 will be the year when home and auto insurance prices spike due to tariffs and inflation.
As the costs of repairing or replacing homes and cars rise, insurers' claim prices increase. To offset the expenses, insurers charge higher premiums, trickling the costs down to policyholders.
Also read: What 25% U.S. auto tariffs mean for the price of vehicles in Canada
Our expert's take
“For the auto industry specifically, vehicle prices and maintenance and repair costs will only continue to increase due to tariffs and inflation. The same goes for home insurance, as tariffs on lumber and steel will hit home repair and replacement costs. As a result, policyholders should expect to face higher premiums throughout 2026.”
Matt Hands, VP of Insurance at Ratehub
Emerging insurance market trends in 2026
The role of AI in the insurance industry is rising. We’re seeing it used across multiple areas, including underwriting, fraud detection and claims processing. We also see an influx of consumers using AI tools like ChatGPT and AI Overviews to get product information, recommendations, quotes and answers to their questions.
While AI can be an excellent tool, it can also pose a threat to individuals and businesses in insurance. For instance, a recent study found that 57% of AI Overview results for life insurance queries contained inaccuracies. Leveraging AI can be a convenient way to get information; however, you should speak with an insurance broker to ensure it is correct. Relying solely on AI for answers could lead Canadians to make potentially poor decisions about their coverage needs.
For businesses, using AI systems in daily operations could make them vulnerable to data breaches and cyberattacks. This often requires companies to purchase additional business insurance for proper protection. Business owners should consider professional liability insurance (E&O) and cybersecurity liability insurance.
Each year, cyber insurance becomes increasingly relevant, and 2026 will not be any different. As AI continues to be integrated throughout the insurance industry, it’s essential to stay informed and protected.
In life insurance, we’ve seen a growing trend of parents inquiring about infant policies throughout 2025. Many Canadians recognize the value of early coverage, and life insurance for children is an excellent way to fill coverage gaps in health care and finances. No underwriting is required, meaning kids will get protection they can keep and grow into.
A look back at our 2025 predictions
Before diving into what’s ahead for 2026, let’s revisit our 2025 insurance predictions (and whether or not we were correct):
Auto insurance: In 2025, we predicted that auto theft trends would continue to drive up premiums and that Ontario and Alberta’s auto insurance reform would evolve as the provinces address rising insurance rates. The prediction was partially correct: while auto theft remains a factor in rising premiums, theft rates continued to decrease in the first half of 2025 (-19.1% yoy). The greatest pressure on premiums came from rising claim costs driven by inflation.
Home insurance: Last year, we said insurance companies would continue to face significant losses from severe weather, and that demand for home insurance would increase as more Canadians purchase homes in response to anticipated housing market trends. Our prediction of severe weather was correct, as insured losses from wildfires and floods totalled more than $1.6 billion as of September 2025. However, we overestimated the extent of the housing market rebound, and as a result, the demand for home insurance did not reach the peak we had expected. A renewed purchase market in Canada has yet to be seen.
Life insurance: As for the life insurance market, our predictions for 2025 included the continued popularity of term insurance, innovation in life insurance products, and greater demand for living benefits coverage. Overall, our predictions were accurate. In the first half of 2025, term life insurance accounted for 19% of total new annualized premiums, with term new premiums and policy counts increasing by 4% and 3% respectively. BMO Insurance also introduced full access to Rovr AI, the first AI assistant of its kind in Canada’s life insurance industry. Lastly, living benefits coverage was an emerging market: data from CLHIA’s 2025 Fact Sheet shows that $10 billion in disability benefits were paid out.
So, did all our predictions hold true? For the most part, yes. While there are nuances, insurance premiums did increase across the board due to external factors like auto theft and severe weather. Additionally, life insurance trends followed our predictions in 2025.
The bottom line
The insurance industry continues to evolve year over year. Staying updated about changes that could affect your coverage is essential to remaining financially covered. To ensure you’re getting the best rate, review your policies regularly and compare insurance quotes from Canada’s top providers.