2025 Commercial Auto Insurance Market Outlook 

The commercial auto insurance market has been challenging for insurers and insureds for the past few years. Various factors have led to difficult market conditions. The industry is still recovering from supply chain disruptions caused by the COVID-19 pandemic and, more recently, the Russia-Ukraine war, which has increased the cost of auto parts and vehicles. A notable uptick in auto fraud, especially identity theft and falsified credit applications, has influenced insurers’ risk appetite. Moreover, concerns about U.S. nuclear verdicts (extremely high jury awards) have impacted commercial vehicles travelling outside Canada. These and other factors may continue to weigh on the market in 2025, and insureds can expect flat to 10% rate increases.

Tips for Insurance Buyers

• Evaluate and integrate advanced vehicle technology solutions, such as telematics, GPS tracking and dash cameras, to bolster your current loss control practices.
• Establish effective onboarding measures for new drivers and regularly retrain drivers on safe driving techniques. Implement a robust retention program to maintain experienced drivers.
• Prioritize accident prevention initiatives and establish proper post-accident investigation protocols.
• Examine your risk management practices, especially as they pertain to integrating electric vehicles into fleets.
• Speak to your insurance professional to determine if any changes to your commercial auto policies are required.

Developments and Trends to Watch

• Fleet electrification—Electric vehicles (EVs) continue to gain traction in the auto industry. Government incentives and a desire for improved sustainability credentials have encouraged some fleet managers to transition their fleets to EVs. In fact, comparatively, sales of EVs in Canada are outpacing sales in the United States, according to a report from S&P Global Mobility. However, infrastructure upgrades could slow EV initiatives for some organizations, as the change may require electrical system upgrades, specialized charging equipment and IT system updates. Further, because EVs tend to cost more than vehicles with internal combustion engines, their insurance rates are usually higher. Other factors unique to EVs, like cyberthreats and battery problems, could also make insuring them costlier.
• Driver shortages—The Canadian trucking industry is grappling with a significant shortage of drivers; current estimates suggest the sector needs an additional 48,000 drivers to perform at full capacity. An aging workforce and difficult working conditions are thought to be hampering attraction and retention efforts. Consequently, businesses may be left having to lower driver applicant standards to fill open positions (e.g., accepting drivers with fewer years of experience or shorter driving records). According to a report by business advisory firm MNP, truck drivers with less than three years of experience are more likely to be involved in a collision. Consequently, commercial motor losses and related claims could increase in 2025.
• Vehicle connectivity and autonomous driving—Although fully self-driving vehicles are not quite here yet, semi-autonomous features, such as obstacle and collision avoidance technology and automatic braking, are becoming standard in certain vehicles. These features can enhance safety and reduce the likelihood of accidents. Moreover, connected vehicle technologies are growing in sophistication; fleet managers can now gather real-time data on driver performance, fuel consumption and engine health to spot efficiencies and reduce accidents. Overall, evolving technologies can potentially improve road safety and reduce insurance costs. However, vehicles with more technology may be more difficult to repair, which could delay claims.
• Regulatory compliance—Heavy commercial vehicles must now have speed-limiter devices installed in British Columbia, following an amendment to the Motor Vehicle Act in April 2024. Regulations in other provinces could tighten in 2025, making compliance a hot topic. Comprehensive coverage can help reduce fleet exposures.

This Market Outlook is not intended to be exhaustive, nor should any discussion or opinions be construed as professional advice.