Soft surety markets and rising claims are testing Canada’s infrastructure projects
Canada’s contractors are gearing up for a flood of federally funded infrastructure work. At the same time, the surety market supporting those projects remains stubbornly soft - even as claims pressure rises.
For Steve Hastings (pictured right), SVP, head of surety for Liberty Mutual Canada, that combination should make brokers and contractors far pickier about whose paper they rely on.
“In times of plenty, we sometimes see some additional surety providers enter the market,” he said. “Some international, some from the US. And these are the ones that you will see… It takes a number of years for the process to play out and for some sizable losses to occur. And they may exit almost as quickly as they came in.”
From the outside, a soft market – more players, more capacity, keener pricing – can look like a win for buyers. Hastings said that view ignores how long it takes for large surety losses to materialize, and how exposed contractors can be when a provider pulls back or leaves the country mid-project.
“It’s currently a tough go for a contractor in Canada,” he noted, pointing to elevated claim activity in the surety sector tied to recent geopolitical and economic uncertainty. “It can be difficult to understand the aggressive facility terms being extended in such a tough environment.”
Aiden Lanzon (pictured left), SVP, Quebec regional leader and construction national practice leader at Liberty Mutual Canada, drew a parallel with other specialty lines that have seen an influx of capacity from players without much loss history.
“These are big projects for insurers,” he said. “At the beginning, you sign the contract. Then the premiums start to flow in. But you’re involved in a project for a long period – six, seven, eight or even nine years. That’s why underwriting is so important.”
In a $115 billion infrastructure cycle, he warned, claims are not a surprise.
“In these large and complex projects, which will likely cost billions, there’re going to be claims,” Lanzon said. “That’s inevitable. But insurers can play a key role in helping prevent the events that cause claims through risk engineering and in effectively managing them.”
When your surety (or insurer) doesn’t go the distance
The risk, Lanzon argued, isn’t just that newer entrants may underprice early projects. It’s that they may not be there when something goes wrong years later – or when a contractor needs to extend or restructure coverage as timelines and costs shift.
“You want to consider whether, as contractors need to understand the pipeline of these projects, you have an insurer who’s going to be there for the long term,” he said. “These projects are so long… A project that says it’s going to take six years is likely going to take seven.”
From the risk‑transfer side, continuity matters when terms need to change.
“Infrastructure projects are long and complex, so they are likely to change as construction progresses. It’s practically a given. That’s why it is so important to work with an insurer committed to the market, with a dedicated and stable team of professionals that can partner with the broker and contractor to refine the risk management program as the project evolves, bringing the right resources and products to bear.”
“Otherwise, you’re introducing a potential risk there,” he added.
He urged brokers and contractors to be “really selective” about which carriers they partner with on multi-year infrastructure work.
“Do they have an established track record of doing big, large projects like this? Because this is big and tempting money,” he said. “A lot of different construction insurers are going to say, hey, I’m willing to do this, I’m willing to do that. The good brokers and the good clients understand who the long-term partners are, the ones who will be able to support them through those projects.”
Claims as an education - if you have the right partner
Lanzon also highlighted the complexity of losses on mega‑projects, where multiple parties, layers of coverage and large dollar figures are the norm.
“The claims process can be arduous, it can be long,” he said. “You want to ensure that you have the insurance companies that are familiar and know how to manage these claims. Because some companies may see an $80 million loss, and start to be concerned.”
By contrast, he noted, Liberty Mutual operates at a global scale.
“Liberty Mutual is a big company. We pay hundreds of millions in claims every single year,” Lanzon said. “Because we play on these large projects around the world, we know how to mitigate and manage the risks associated with them, and how to effectively manage their claims.”
That experience, he argued, turns claims into a learning tool rather than an existential threat.
“As we say on the insurance side, a claim is like an education,” Lanzon said. “Having a dedicated, stable team creates institutional knowledge. Looking across a deep construction book lets your team apply that collective wisdom.”
For Hastings, the message is similar on the surety side: capacity quality matters more than headline price when the cycle turns.
“We’re obviously going to match our construction strategy to our broker partners who share and believe in that same strategy,” he said. “When you get the contractor on board with that as well, it’s a perfect partnership.”