Insurance Brokerage in Canada vs. the United States: How Could Their Industry Differ?

The Closeness Between Canadians and Americans

Canada and the United States are known for having a significant number of people living in each other’s country. Whether for work, study, holidays, or retirement, Canadians and Americans are culturally as close as neighbors can get.

However, some of their systems differ considerably, with healthcare and education often cited as key examples. But what about a less-discussed sector that remains vital to both economies?

Insurance is a perfect example. And yet, this vital industry varies more drastically than many realize. In this ever-growing field, each nation approaches risk, responsibility, and protection differently when designing policies and calculating premiums.

Regulation and Licensing

Let’s start with the Canadian side. Insurance distribution is regulated primarily at the provincial level. Each province has its own licensing authority. For example, there is the Autorité des marchés financiers (AMF) in Quebec, whereas in Ontario there is the Registered Insurance Brokers of Ontario (RIBO). Brokers and agents must be licensed locally, adhere to strict codes of ethics, and complete continuing education. At the federal level, the Office of the Superintendent of Financial Institutions (OSFI) oversees the solvency of insurers but not distribution licensing.

In the United States, regulation is also managed at the state level, with each state’s Department of Insurance responsible for licensing. Agents must pass state exams and often need multiple licenses to operate across state lines. The National Association of Insurance Commissioners (NAIC) promotes some level of uniformity, but regulatory frameworks remain fragmented. Federal oversight is limited due to the McCarran–Ferguson Act (1945), which gave states primary authority over insurance regulation. The result in both nations is a complex mosaic of regional rules rather than a single, national standard.

Personal Lines Coverages

Beyond regulation, the differences in insurance become most apparent to the average consumer in personal lines like auto and home insurance. The divergence can be seen in two key areas: the structure of the market and the products themselves.

In Canada, the insurance landscape is heavily shaped by the independent broker. While captive agents (who represent a single insurer like Desjardins or Co-operators) exist, the broker-driven model is a defining feature of the market. Canadian consumers are accustomed to working with a broker who represents them and can solicit quotes from multiple insurance companies to find the best fit.

The United States features a similar division:

• Captive agents represent a single, often massive, insurer (e.g., State Farm, Allstate).

• Independent agents function like Canadian brokers, offering products from various insurers.

  
  

The critical difference lies in market share. The U.S. market is dominated by large direct-to-consumer carriers (like Geico) and extensive captive agent networks. As a result, while the option for independent advice exists, the American consumer is more likely to engage directly with a single insurer. This means achieving a full market comparison often requires a U.S. client to actively shop around with multiple carriers or specifically seek out an independent agent.

The insurance products themselves also reflect a pattern of Canadian uniformity versus American fragmentation. In Canada, auto insurance is provincially regulated, leading to a relatively standardized quoting process and minimum coverage requirements. For instance, Ontario mandates at least $200,000 in third-party liability, though most brokers advise $1 million or more. In provinces like British Columbia and Saskatchewan, government-run insurers (ICBC and SGI, respectively) create an even more uniform system.

In contrast, the U.S. auto insurance market varies dramatically by state. Minimum coverage requirements can be worlds apart; for example, Florida requires just $10,000 in personal injury protection, while Maine mandates significantly higher liability limits. This state-by-state fragmentation creates a more complex landscape for consumers to navigate.

Commercial Lines Coverages

The divergence becomes even more pronounced when it comes to liability and commercial coverage.

In Canada, the presence of universal healthcare and caps on non-economic damages helps control claims costs. Courts are generally more conservative with awards, which translates into more stable liability premiums.

In the U.S., however, the legal environment is far more litigious. Jury trials, punitive damages, and uncapped awards can result in settlements reaching tens of millions of dollars. Combined with the high cost of private healthcare, these factors drive liability premiums higher and create significant volatility. The phenomenon of “social inflation,” where claims costs rise faster than general inflation due to legal and societal trends, has become a major driver of insurance pricing in the U.S. market.

Distribution also differs. In Canada, brokers often negotiate directly with insurers or use informal marketing approaches to secure terms. Large accounts may involve competition between brokers, but the process is generally less formalized.

In the United States, formal procurement processes are more common, particularly in the public sector or for large corporations. These often take the form of Requests for Proposals (RFPs), which function as the American equivalent of a “tender.” The RFP process in the U.S. typically unfolds in two stages:

1. The client issues an RFP to select a broker or agent of record, evaluating candidates on their expertise, industry knowledge, and service offerings.

2. Once selected, that broker or agent issues its own RFP to insurers, seeking proposals that meet the client’s risk profile and coverage needs.

   
   

This layered approach creates transparency and competitiveness but also reflects the U.S. system’s complexity. Importantly, U.S. insurers generally only work with one broker or agent of record per client, meaning that once appointed, no other intermediary can market the same account to the same carriers.

Technology and Distribution

These market structures are further shaped by differing business strategies and approaches to technology.

In Canada, the traditional broker-driven model continues to hold strong. While digital tools have grown in popularity, they often complement rather than replace brokers, who serve as trusted advisors. Canadian consumers still tend to value personalized advice, especially for complex policies. As a result, technological innovation is often focused on empowering the broker channel.

In the United States, corporate strategy has driven a stronger push toward a direct-to-consumer distribution model. Large carriers such as Geico, Progressive, and State Farm have invested billions in advertising and online platforms, encouraging clients to bypass an intermediary. This has created a hyper-competitive environment where independent agents must differentiate themselves with specialized expertise. Technology adoption is also faster, with U.S. insurers more aggressively implementing telematics, usage-based insurance, and predictive analytics, partly due to the vast scale of their market.

Conclusion and Automation

While Canada and the United States share cultural closeness, their insurance industries diverge in meaningful ways:

• Canada emphasizes provincial regulation, broker-driven distribution, and relative stability due to universal healthcare and more conservative legal frameworks.

• The U.S. operates under state-by-state regulation, aggressively embraces direct-to-consumer distribution, and faces higher volatility driven by litigation, healthcare costs, and competitive procurement processes like RFPs.

  
  

Despite these differences, brokers and agents on both sides of the border share similar daily workflows in their management systems (BMS). Applied Epic, for instance, is one of the most widely used BMS platforms in both countries. As both markets evolve, the pressure to operate efficiently grows, and maximizing the potential of these systems is no longer a luxury but a competitive necessity.

This shared operational challenge is where automation becomes a critical lever for growth. That’s where Floapi comes in. Floapi helps insurance distribution firms, whether brokerages or agencies, automate their most recurring tasks. With predefined solutions tailored to specific use cases, we offer the most suitable one after carefully studying your needs. From streamlined data integration (API) to intelligent document processing (IDP) and robotic process automation (RPA), our engineers are at the forefront of technological innovation, making sure your team can focus energy on the tasks that matter most.

Sources 

• McCarran–Ferguson Act, 15 U.S.C. §§ 1011–1015 

• Stikeman Elliott (2024). U.S. and Canadian Law: Six Key Differences for Investors 

• Applied Client Network (2024). Bridging Borders: Exploring Applied Systems and the Property & Casualty Insurance Market 

• Deloitte 2025 Insurance Outlook