Insurance rates across Ontario have been steadily rising, driven by a range of factors — from increasingly severe weather events to rising repair costs, ongoing supply chain disruptions, and inflation. For automobile policies the newer issues of escalating vehicle theft rates and the rising cost of the used vehicle are also pushing these increases forward.
Now, proposed tariffs by the United States on Canadian steel, aluminum, and other goods could introduce additional strain — potentially resulting in even higher insurance premiums. Here’s how these economic changes may impact various types of insurance coverage in Ontario.
Auto Insurance: Manufacturing Costs and Claims on the Rise
The U.S. has proposed new tariffs on Chinese-made steel, aluminum, and electric vehicles, which could have add-on effects for Canadian goods that include imported components. Canada is expected to implement countermeasures on materials like steel, aluminum, and auto parts — all of which are integral to vehicle production and repair. With the highly integrated nature of the North American auto industry, where parts can cross the border multiple times before final assembly, these tariffs are likely to create additional cost and time delays.
Insurers are already anticipating higher claims costs due to the rising price and potential scarcity of auto parts. This trend is already evident: according to the Insurance Bureau of Canada, vehicle repair costs rose by approximately 20% between 2021 and 2023, driven by parts shortages and rising labour costs. These increases are forcing insurance companies to adjust premiums to reflect the elevated cost of settling claims.
Home Insurance: Construction Costs and Rebuild Values
Tariffed goods include construction materials such as steel, aluminum, and lumber — key components in home building and repairs. As the price of these materials increases, so does the cost to repair or rebuild homes. This directly affects insured rebuild values.
Unlike market value, which reflects what a buyer would pay for a property, home insurance is based on rebuild cost — what it would take to reconstruct the property using current materials and labour rates. For example, a 2,000 sq. ft. home that cost $300,000 to rebuild in 2020 may now be valued at $360,000 or more due to construction inflation and material scarcity.
Higher rebuild values mean higher premiums. In addition, the potential for tariff-driven supply chain bottlenecks could lead to more competitive bidding for available labour and materials, further raising the cost of and timeliness of claim settlements. Insurers are factoring these realities into their rate filings across Ontario.
Commercial Insurance: Complex Impacts, Greater Need for Guidance
Commercial insurance is perhaps the most complex area impacted by economic shifts like tariffs. Canadian businesses that operate across North America, particularly those reliant on materials or goods that are now subject to tariffs, face increased operational costs. These added expenses can influence not just premiums, but also underwriting criteria and risk exposure assessments.
In times like these, coverage such as business interruption insurance becomes particularly valuable. It can help bridge gaps in income if supply chain issues or tariff-related delays force temporary shutdowns or impact service delivery. For clients in construction, manufacturing, or logistics, it’s more important than ever to ensure these coverages are up to date and reflect new risk realities.
A Shifting Market: What This Means for Insurance in Ontario
The compounding effect of inflation, rising claims, and tariff uncertainty is pushing the insurance industry into what’s known as a hard market. In a hard market, insurers typically implement rate increases, tighten underwriting standards, and reduce risk appetite.
You the client may begin to notice longer turnaround times, more detailed underwriting requirements, and fewer flexible coverage options — particularly for properties with older features, high replacement costs, or non-standard risks.
At the same time, insurers are reevaluating their investment portfolios and capital reserves to manage financial exposure. While the Ontario government has pledged to offer some financial relief to businesses affected by rising costs, the long-term effectiveness of these efforts remains uncertain.
That’s Why You Have a Broker
In challenging markets like this, working with a broker becomes more important than ever. At Cassidy & Young Insurance Brokers, we do more than just shop the market — we advocate for our clients, evaluate their unique risk profiles, and make sure their coverage evolves with changing economic conditions.
We take steps such as:
- Reviewing rebuild evaluations annually to prevent under-insurance.
- Recommending relevant endorsements, like guaranteed replacement cost or overland water protection, based on emerging risks.
- Working with insurers who offer flexibility around closing dates or underwriting timelines — something especially valuable during fast-moving real estate transactions.
Unlike call centres that offer a single product, we access multiple insurers to find competitive pricing without sacrificing the strength of coverage. That kind of flexibility and foresight is key in a hard market.
Let us take one more concern off your plate. We’re here to help you and your clients navigate these economic changes with clarity, confidence, and expert advice.
Looking Ahead
While it’s impossible to predict every outcome of the proposed tariffs and evolving economic conditions, what we do know is that uncertainty often leads to change — and the insurance industry is no exception. As brokers, we’re staying informed on these developments, monitoring insurer responses, and analyzing how global trends may continue to shape premiums, policy wording, and underwriting practices here in Ontario.
Our commitment is to ensure that our clients and partners are not only protected today, but well-prepared for tomorrow. Whether you’re insuring a home, a vehicle, or a business, we’re here to help you navigate rising costs, coverage shifts, and any future market changes with confidence.
If you’re unsure how these factors may impact your policies — or simply want to know your options — don’t hesitate to reach out. We are monitoring the road ahead so you don’t have to.
Sources
- Financial Services Regulatory Authority of Ontario (FSRAO). (2024). Approved Auto Insurance Rate Filings. Retrieved from https://www.fsrao.ca/
- Insurance Bureau of Canada (IBC). (2024). Facts of the Property and Casualty Insurance Industry in Canada. Retrieved from https://www.ibc.ca/
- Mitchell International. (2023). Canadian Industry Trends Report: Rising Repair Costs and Labour Shortages. Retrieved from https://www.mitchell.com
- Altus Group. (2024). Construction Cost Guide. Retrieved from https://www.altusgroup.com
- Statistics Canada. (2024). Building Construction Price Index. Retrieved from https://www150.statcan.gc.ca/
- Office of the United States Trade Representative (USTR). (2024). Statement on New Tariffs on Steel, Aluminum, and EVs. Retrieved from https://ustr.gov
- Global Affairs Canada. (2024). Canada’s Response to U.S. Trade Measures. Retrieved from https://www.international.gc.ca
- Canadian Underwriter. (2023). Understanding the Shift to a Hard Market in P&C Insurance. Retrieved from https://www.canadianunderwriter.ca
- Registered Insurance Brokers of Ontario (RIBO). (2024). Why Use a Broker? Retrieved from https://www.ribo.com/
- Insurance Brokers Association of Ontario (IBAO). (2024). Broker Advantage in a Changing Market. Retrieved from https://www.ibao.org/
