Together towards tomorrow: Insurance trends outlook 2026

Trend #1: AI moves from experimentation to enterprise strategy

AI has moved beyond the hype. It is now central to how Canadian insurers operate, innovate, and compete. The industry is shifting from broad digital transformation to a more intentional ambition, building AI‑powered organizations capable of faster decision‑making, more precise risk assessment, and more adaptive customer experiences.

Global indicators reinforce this direction. According to the KPMG 2025 Insurance CEO Outlook, 73% of insurance CEOs now view AI as a top investment priority and expect meaningful returns within 1-3 years, signaling that AI maturity is quickly becoming a global performance benchmark.¹ Many CEOs also plan to allocate 10–20% of technology budgets to AI, intensifying demand for external expertise and accelerating investment from third‑party service providers, cloud platforms, and Insurtech partners. These ecosystem players are pouring capital into automation tools, agentic AI, and advanced analytics – capabilities insurers can tap into rather than build entirely in‑house.

Against this backdrop, Canadian insurers are accelerating deployment across underwriting, claims automation, distribution enablement, and customer service. Leaders described a decisive shift away from isolated pilots toward “AI‑first” designs, where workflows, products, and customer interactions are built from the ground up with intelligent automation at the center.

Looking ahead, AI will likely become even more deeply embedded across the insurance value chain, supported by greater emphasis on data quality, model governance, and responsible use. For Canadian insurers, the challenge is no longer adoption, it is scaling AI in ways that enhance transparency, strengthen trust, and support long‑term competitiveness in a rapidly advancing global landscape.

Trend #2: Regulatory expectations continue to evolve

Canada’s regulatory landscape is entering a more assertive, outcomes‑focused period. One area where regulators are not staying stagnant includes the modernization of the Managing General Agent (MGA) framework, a structure that governs intermediaries who distribute insurance products on behalf of insurers. The revised framework places sharper expectations on training, suitability, oversight and accountability as MGAs increasingly shape customer experiences.

The changes to the MGA framework are in addition to ongoing auto insurance reforms, stricter expectations around product design and fair outcomes, and intensifying scrutiny of conduct, governance and distribution practices. They also intersect with broader regulatory measures, including IFRS 17 reporting discipline, OSFI’s continued focus on operational resilience, capital adequacy, and climate risk, and evolving national expectations around market conduct. This heightened regulatory activity reflects a broader global pattern as 77% of insurance CEOs believe the accelerating pace of regulatory change could challenge organizational success.¹

For Canadian insurers, regulatory evolution requires more than compliance alone. Efficiency must advance alongside compliance effectiveness, enabling organizations to meet heightened expectations through a right‑sized, risk‑informed operating model. This includes strengthening predictive analytics and data‑driven compliance capabilities, deepening governance across intermediaries and advice, and empowering the business to make decisions that are compliant, efficient, and value‑adding.

Trend #3: Talent and workforce transformation become strategic imperatives

Technology may be accelerating, but insurance leaders have made it clear that a clear differentiator in the years ahead will be people. Across Canada, insurers emphasized that workforce readiness, and the ability to adapt roles, culture, and capabilities, is now a defining strategic priority. This sentiment is also reflected globally with 77% of insurance CEOs citing AI‑related workforce readiness as a constraint on growth, while competition for digital and analytical talent continues to intensify.³ At the same time, 83% report that AI is reshaping expectations for training, decision‑making, and foundational skills, underscoring that insurance work itself is being redefined.⁴

Canadian leaders should move employees from transactional tasks toward higher‑value activities such as judgment‑based risk assessments, consultative support, and relationship‑driven roles. This requires continuous upskilling, deeper investment in change management, and a renewed focus on knowledge transfer as experienced talent retires.

Trend #4: Cyber, fraud, and digital risks are escalating

There is a rising alarm in Canada – cyberattacks and fraud schemes are growing in scale, sophistication, and financial impact. This is a trend we are seeing globally as well, with 83% of insurance CEOs identifying cybercrime as the single biggest barrier to organizational growth, and cybersecurity remains their top risk‑mitigation investment priority.⁵ In Canada, both P&C and life insurers are confronting more organized fraud rings, digital identity manipulation, false documentation, and increasingly complex cyber‑enabled attacks.

New measures, including mandated fraud‑reporting requirements, signal a shift toward more coordinated national action and a recognition that cyber and fraud risks now sit at the heart of operational resilience. For insurers, this means elevating fraud analytics, behavioural monitoring, and AI‑enabled detection; strengthening cyber governance at the board level; and working more closely with regulators, law enforcement, and industry peers. Customers, meanwhile, increasingly expect visible, proactive protection. 

Trend #5: Climate, longevity, and societal change are redefining the insurance value proposition

Escalating climate events, widening protection gaps, and affordability pressures, especially in flood‑ and wildfire‑exposed communities, are reshaping risk across Canada. This has become evident as 72% of insurance CEOs now embed sustainability into their business strategies, with growing reliance on AI for climate modelling, resource efficiency, and more sophisticated scenario planning.⁶ At the same time, ESG reporting has become a leading compliance priority, signaling rising expectations for transparency and long‑term resilience.⁷

To adapt, insurers should shift from a reactive model toward one centered around risk reduction and resilience. This involves leveraging data to anticipate climate impacts, creating products that influence mitigation behaviours, and partnering with governments and industry to close protection gaps and strengthen community preparedness.

Alongside climate pressures, longevity and health span emerged as equally influential forces. Insurers are increasingly integrating wellness incentives, early‑detection tools, and holistic health‑wealth solutions to help Canadians live longer, healthier lives.

Trend #6: Rising M&A and consolidation as insurers pursue scale and efficiency

Consolidation has emerged as a consistent theme across the industry, driven by mounting operational pressures, rising technology investment needs, and the pursuit of stronger distribution capabilities. Global CEOs share this momentum as half of them expect to pursue high‑impact M&A within the next three years, making insurance the sector with some of the strongest deal appetites worldwide.⁸

A major factor influencing this activity is the growing role of private equity and pension funds in both the global and Canadian insurance markets. These investors are increasingly drawn to opportunities that allow them to match long‑term, stable return expectations with long‑duration liabilities, particularly in the annuity and retirement space. Their capital is fueling additional deal activity, enabling insurers to de‑risk balance sheets, expand product offerings, and accelerate modernization efforts.

For Canadian insurers, particularly those in smaller or specialized markets, scale is becoming increasingly essential. Larger platforms enable more meaningful investment in AI, data modernization, and digital distribution, while also improving cost efficiency and market reach. As M&A activity intensifies, success will hinge on integrating digital capabilities, advancing data and analytics maturity, and forging partnerships with Insurtechs and embedded insurance ecosystems to expand access and accelerate innovation. 

Trend #7: Macroeconomic uncertainty and geopolitical volatility are reshaping strategy

While Canada’s economy is stabilizing, insurers continue to highlight uncertainty as a rising strategic challenge as they navigate shifting interest rates, geopolitical tensions, tariffs, and evolving global trade dynamics.⁹

Insurers will need to start to shift from reactive adjustments toward stronger scenario planning and more proactive risk management as part of their long‑term transformation efforts. For Canadian insurers, this means reinforcing macro‑risk playbooks, diversifying across markets, products, and channels, and expanding capabilities in asset management, longevity solutions, and retirement services. Growth opportunities also remain in wealth management and emerging global markets, particularly Asia, which underscores the importance of disciplined, outward‑looking strategy in an increasingly interconnected economic environment.

Looking ahead and key themes shaping Canada’s insurance industry

The future of Canada’s insurance industry will be shaped by collective action where insurers, regulators, distributors, and partners are aligned on shared goals. The industry is entering a period where collaboration, clarity of purpose, and adaptability will matter as much as technical capability.

Insurance leaders should embrace four themes to help strengthen resilience and readiness in the years ahead:

• Approach AI with balance – responsibly, confidently, and with clear guardrails.
• Evolve governance, compliance, and risk practices to meet rising expectations.
• Invest in people and culture to build long‑term capability and confidence.
• Embed societal priorities such as longevity, climate resilience, and community well‑being into strategy.

Together, these themes suggest an industry preparing not just for technological change but for a more connected, transparent, and human‑centred future.