Best’s Market Segment Report: Focus on Digitization Bolsters Growth for Canada’s Life/Annuity Insurers

OLDWICK, N.J.--(BUSINESS WIRE)--Canada’s life/annuity insurers reported favorable operating results in their core lines of business in 2025 owing to favorable investment returns and increasing sales trends, supported by digitization and technology-driven, customer-centric business models. according to a new AM Best report.

In its Best’s Market Segment Report, “Canadian Life/Annuity: A Focus on Digitization Bolsters Growth,” AM Best states that sales have been driven partially by efforts to increase accessibility and speed in acquiring life insurance, including enhancements by some companies to apply artificial intelligence to accelerate decision-making within underwriting. While premium trends are favorable, there are coverage gaps in Canada and a shift toward high-net-worth clients.

“Coverage gaps are being driven by policies that have been acquired in previous years that are not keeping pace with inflation, including higher mortgages and salaries,” said Kevin Varvaro, senior financial analyst, AM Best. “This is where technology comes in to attempt to address these issues through innovation and streamlining the sales process.”

According to the report, Canada’s life/annuity segment recorded year-over-year pretax and post-tax operating gains of 4% and 7%, respectively, in 2025. Insurance revenue growth was modest but positive over the prior year, up just over 2% to CAD 102.8 billion. International business lines continue to see faster revenue growth than the mature Canadian life market, with European revenues growing over 8% in 2025 and Asian revenues growing nearly 18% in the same period.

“These factors and others are supporting AM Best’s stable outlook on Canada’s life/annuity insurance industry remains at stable, although the escalating trade dispute with the United States, as well as inflationary pressures and cyber threats, is creating challenges and growing uncertainty for carriers,” said Edward Kohlberg, director, AM Best.

Other report takeaways include:

• Canada’s life/insurance segment saw a 24% decline in net investment results in 2025 to just over CAD 6.7 billion following a 33% increase in 2024.
• Total Canadian life insurance new annualized premium reached a record high of CAD 2.3 billion in 2025, according to LIMRA, mainly driven by whole life premiums, which grew 10%.
• The regulatory prescribed Life Insurance Capital Adequacy Test (LICAT) and Capital Adequacy Requirements Guideline for Life and Health Insurance ratios (CARLI) have been maintained by AM Best-rated insurers notably above supervisory targets.

To access the full copy of this report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=368891.

This Best’s Market Segment Report is one of several reports focused on Canada’s major insurance segments ahead of AM Best’s Insurance Market Briefing – Toronto, which will take place Wednesday, Sept. 23, 2026. For more information about the complimentary AM Best’s Insurance Market Briefing – Toronto, please visit the event website.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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