Canadian business insolvencies have declined in recent annual and trailing-12-month comparisons, while data from specific industries, such as mining and oil & gas, remain a bit grimmer. What will these trends mean for commercial insurance underwriting in Canada? That’s exactly what we want to find out.
To prepare this guide, our editorial team reviewed the Office of the Superintendent of Bankruptcy’s June 2026 statistics, the Office of the Superintendent of Bankruptcy’s 2025 annual statistics, the Insurance Bureau of Canada’s explanation of commercial insurance pricing, and the Insurance Bureau of Canada’s business-coverage guide.
What Do Declining Business Insolvencies Mean for Insurance in 2026?
On the surface, a 21.1% drop in business insolvencies looks highly favourable for the Canadian economy. However, a deeper dive into the OSB data reveals that this isn’t necessarily a sign of “economic stability,” but rather a sign of “survivalist stabilization.” Many of the “zombie” companies that were expected to fail when government pandemic support ended have already cleared out of the system.
This distinction is critical for commercial insurers. An outright bankruptcy usually means a policy is cancelled and the risk disappears from the carrier’s books. A business in a “proposal” state, however, is a company under extreme financial duress that is still operating.
Key Findings
- Business insolvencies decreased by 9.7% in the 12 months ending June 30, 2026, compared with the preceding 12-month period.
- Business insolvencies increased by 5.5% in June 2026 compared with June 2025. However, OSB cautions against placing too much importance on monthly figures because they can be volatile.
- The largest increases over the last 12 months were in management of companies and enterprises, accommodation and food services, mining, quarrying, and oil and gas extraction.
Sector Results Differ
Although total insolvencies decreased nationally, individual industries have seen significant increases. OSB’s 12-month data through June 2026 found the largest increases in insolvencies came from management of companies and enterprises, accommodation and food services, and mining, quarrying and oil and gas extraction. Meanwhile, the largest decreases came from retail trade, wholesale trade, and health care and social assistance.
While insolvency counts can be insightful, they don’t necessarily indicate the level of risk within a particular industry unless contextualized by the total number of operating businesses in that industry. The total count does not indicate the number of losses, the size of businesses going under or an insurer’s specific exposure. An industry should not be categorized as high-risk simply because it has many insolvencies.
What This Means for Commercial Insurance Underwriting
Commercial rate determination should include coverage needs, liability risk and replacement costs. Location, claims history, loss-control efforts and overall market conditions also affect commercial rates. Discussions about insurance renewals should be based on these factors.
Read More: See How a Business Owner’s Policy Works
When Financial Information May Matter
Depending on the lines of coverage sought, such as D&O, surety, trade credit, crime or business interruption, and the limits requested, insurers may ask for financial information such as payroll, debt, occupancy and revenue. The underwriting request or application will dictate what information is necessary.
Directors and Officers (D&O) Liability
Review policy wording and quotes for limits, coverage for the organization, coverage for directors or officers, exclusions, defence costs and the treatment of prior acts. Also review any insolvency-related wording. Although insolvencies have fallen nationally, this doesn’t necessarily mean the market has softened on D&O terms or pricing for your organization.
What to Bring to a Commercial Insurance Renewal
| Renewal item | Why it is useful | Evidence to provide |
|---|---|---|
| Current operations | Changes in the nature of the work may change your liabilities. | Revenue by activity, product, service, location and contract |
| Property values | Market value is not replacement cost. | Recent appraisal, equipment list, stock values and improvements |
| Business income | Limits and restoration periods should be up to date. | Financial statements, payroll, continuing expenses and recovery assumptions |
| Claims and incidents | Corrective action affects the overall risk, and so do outstanding issues. | Loss runs, incident log, root causes and completed controls |
| Safety and maintenance | Specific controls are stronger than general assurances. | Inspection reports, service records, training and emergency plans |
| Quote comparison | Price means little unless it comes with commensurate protection. | Same limits, deductibles, forms, exclusions and endorsements |
Read More: Learn How Certificates of Insurance Work