Canadian life insurance and annuity sales reached a record CAD 2.3 billion in total new annualized premiums during 2025, driven by whole life product demand and steady regulatory capital buffers, according to a market report published by rating agency AM Best. Despite ongoing consumer inflation pressures and heightened operational cybersecurity risks, AM Best maintains a stable sector outlook for Canadian insurers backed by favorable technical results and proactive digital transformation efforts.
Record Premium Growth Led by Whole Life Products
Total new annualized life insurance premiums in Canada climbed 4% in 2025 compared to the previous year, hitting a peak of CAD 2.3 billion, AM Best reported. Whole life insurance products fueled this expansion, surging 10% year-over-year and capturing 70% of the overall premium market. Within that category, participating whole life policies dominated consumer sales, accounting for 87% of all new premiums underwritten in the segment.
At the same time, the rating agency highlighted a widening protection gap across the Canadian market. Researchers noted that older policies fail to keep pace with inflation, leaving households underinsured relative to rising financial obligations such as salaries and mortgage liabilities. However, this macroeconomic uncertainty also presents a commercial opportunity for insurers, as consumer demand for protective coverage increases during volatile economic periods.
Regulatory Capital Margins Outpace Monitoring Targets
Canadian life and annuity providers continue to maintain capital reserves significantly higher than regulatory minimums, according to AM Best. Insurers tracked by the agency operate well above supervisory targets prescribed under the Life Insurance Capital Adequacy Test (LICAT) set by the Office of the Superintendent of Financial Institutions (OSFI) and the Capital Adequacy Requirements for Life Insurance (CARLI) guideline enforced by the Autorité des marchés financiers (AMF).
Specifically, the four largest Canadian life and annuity insurers each maintained an operating LICAT ratio above 125% through the second quarter of 2026. AM Best attributed the sector’s financial resilience to these prudent capital cushions, alongside diversified business lines, geographic expansion, steady revenue growth, and disciplined enterprise risk management.
Technology Adoption and Emerging Operational Risks
Insurers across Canada are accelerating digital transformation initiatives and deploying artificial intelligence tools to streamline core operations. While these modernization efforts improve operational efficiency and client servicing, AM Best warned that the expansion of digital infrastructure simultaneously introduces higher operational vulnerabilities, particularly regarding cyber threats.
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