Canada

Canada faced significant challenges in 2024, with slow economic growth and a strained judicial system.  Looking ahead to 2025, professional liability and construction claims are likely to remain on the rise, while the upcoming Canadian election could result in significant regulatory changes.

A Look Back at 2024

Overall Weak Economic Growth

Economic growth in Canada remained sluggish throughout 2024, with real gross domestic product (GDP) expanding by only 0.5% in both the first and second quarters and slowing further to 0.3% in the third quarter. Notably, GDP per capita has declined for six consecutive quarters.¹                                     

Inflation, which had surged to a peak of 8% during the COVID-19 pandemic, has since dropped significantly to 1.6%.²  In response, the Bank of Canada has reduced the interest rate over the past year, lowering it from 5% to 3.25%.

The Courts Continued to Move Slowly

The backlog in the Courts has continued to be a problem in Canada.  In May 2024, there were 57 federally appointed judicial vacancies across Canada, with 19 in Ontario alone.³  The issue has become so bad that Chief Justice Richard Wagner wrote to Prime Minister Justin Trudeau in 2023 stating that “The current situation is untenable and I am worried that it will create a crisis in the justice system.”⁴

The Federal Court this year admonished the Federal Government, writing: “With the greatest respect, the Court finds the Prime Minister and Minister of Justice are simply treading water.  They have failed […] all those that rely on them for the timely exercise of their powers in relation to filling these vacancies.  Also failed are those who have unsuccessfully sought timely justice in the Superior Courts and Federal Courts across Canada.”⁵

A 2023 Report by the Advocates society found that it takes 1.5 hours for a motion longer than 2 hours to be heard in Toronto, more than 1.5 years after the trial management conference for a 3-week family law trial to be heard in Brampton and more than 4 to 5 years for a civil action to proceed from commencement to trial.⁶

This backlog went largely unaddressed in 2024 and it should be expected that long judicial wait time will remain a reality in the years to come.

An Insurer’s Rate of Return May Be Awarded Over the Statutory Rate for Cost Awards

Aubin v Synagogue and Jewish Community Centre of Ottawa, 2024 ONCA 615 was an appeal of a personal injury action.  The appellant sought a prejudgment interest rate of 8.46% based on their insurer’s and their own investments’ rates of return.

In Ontario, the presumptive prejudgment interest rate is 5% under the Courts of Justice Act, however, this rate can be deviated from.  The Court found that the insurer’s average rate of return was over two times the 5% presumptive rate and, given the circumstances, it would be unjust to apply the presumptive rate.  As such, an 8.46% pre-judgement interest rate was awarded.

Looking Ahead to 2025

A Change in Government Could Result in Policy Changes Which Affect Insurers

Against the backdrop of weak economic growth, Canadian political parties have began ramping up for an election.  Although the next election must occur by October 2025, it could be triggered earlier by a vote of no-confidence.

At this point, the Conservative Party, led by Pierre Poilievre, leads in the polls over Justin Trudeau’s Liberal Party.  A Conservative government could result in deregulation, however, risks may still arise from ongoing security class actions, climate change and environmental related torts, cybersecurity, and financial disclosure.  Further, while this deregulation could possibly ease compliance requirements, it could also introduce volatility into market conditions. 

Regardless of government change, underwriters should remain cautious of risks stemming from sustainability and ESG reporting, cybersecurity and global economic uncertainty.

Professional Liability Claims Are Likely To Rise

There are about 8000 medical complaints filed in Ontario per year, however, on average, only 54 medical professionals are subjected to any formal discipline per year.  These statistics are similar for other professional bodies in different industries.  In light of this, many regulators are beginning to increase the amount of prosecutions in view of what they perceive to be falling standards.  It should be expected that there will therefore be more formal disciplinary proceedings and claims made in this area.

Further, in light of increased issues of access, the Government has attempted to make services of some professionals more accessible by expanding their mandates.  For example, as of January 1, 2023, pharmacists in Ontario are now able to prescribe for minor ailments.  This change exposes pharmacists to additional risks as their responsibilities expand.  As the Federal and Provincial government continue to address an overburdened healthcare system, insurers should carefully consider the increased risks that come along with these changes.

Construction Will Continue to be a Growth Area

With Canada’s infrastructure struggling to keep pace with its population growth, infrastructure projects are expected to remain a key driver of economic activity. The federal government has pledged $200 billion toward new infrastructure projects over the next five years.

Canada is also grappling with a significant housing shortage, prompting many municipalities to adjust zoning laws to encourage the construction of new housing units. As a result, housing is likely to continue being a growth area.

Additionally, modular and prefabricated construction is gaining popularity. However, these projects come with unique challenges, such as supply chain disruptions, transportation issues, and scheduling complexities. Questions remain regarding the durability of these smaller homes.

The increasing frequency of extreme weather events is another growing concern for construction projects. In particular, mass timber projects are particular susceptible to wildfires.

Changes to Legislation May Considerably Affect Cyber Insurance

The Canadian Cyber Insurance market has continued to grown, with cyber crime on the rise.  Canadian companies are paying an average of $7 million in data breach costs per breach, which is the third highest in the world.⁷

In late 2022, the Ontario Court of Appeal, in a trilogy of decisions,⁸ addressed whether a company would be held liable for the tort of intrusion upon seclusion when their customer’s data had been breached.  The Court ultimately found that a company would not be held liable in this situation, however, that may change with upcoming legislation.

Bill C-27, if enacted, would overhaul PIPEDA and replace the privacy portion with three separate acts: the Consumer Privacy Protection Act, the Personal Information and Data Protection Act and the Artificial Intelligence and Data Act.  The Bill includes a vicarious liability provision for contraventions of the Act by an employee or agent.  With the looming election, it is unclear if the Bill will be passed or with what amendments, including with respect to third-party liability.

[1] “Gross domestic product, income and expenditure, third quarter 2024,” Statistics Canada, Published November 29, 2024,

[2] “Bank of Canada makes a chunkier rate cut, lowering by half point for 1^st time since pandemic,” CBC News, Published October 23, 2024.

[3] "Judge Shortage paralyzes court system, resulting in delays and dismissals,” CTV News, Published May 13, 2024.

[4] Court says Trudeau, justice minister ‘failed’ Canadians by letting judicial vacancies build up.” CBC, Published February 13, 2024.

[5] Hameed v Canada (Prime Minister), 2024 FC 242 at para 6.

[6] Delay No Longer. The Time to Act Is Now, The Advocates Society, Published June 29, 2023

[7] “2023 IBM Cost of a Data Breach Report – Canadian business are being hit hard,” IBM, Published July 24, 2024.

[8] Owsianki v Equifax Canada Co, 2022 ONCA 813; Obodo v Trans Union of Canada, Inc, 2022 ONCA 814; and Winder v Marriott International, Inc, 2022 ONCA 814.

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