New CLHIA data reveals a 10 per cent surge in Canadian insurance payouts, driven by rising drug costs and record retirement savings growth
Canada's life and health insurance industry paid out $157 billion in benefits to Canadians in 2025 - a 10 per cent increase over the previous year - as prescription drug costs continued to climb and demand for retirement income products accelerated, according to the Canadian Life and Health Insurance Association (CLHIA).
The figures, released October 20, 2026, are drawn from the CLHIA's annual Canadian Life and Health Insurance Facts report and reflect the growing financial footprint of an industry that now holds nearly $1.3 trillion in assets domestically and an additional $1.6 trillion internationally.
"As Canada's need for investment continues to grow, the industry remains well positioned to provide the long-term capital needed to support that growth," said Stephen Frank, President and CEO of CLHIA, in Toronto.
The $157 billion paid in benefits - the equivalent of more than $430 million every day - breaks down across three pillars: $83.8 billion in retirement benefits, $54.7 billion in health insurance benefits, and $18.3 billion in life insurance payouts.
Drugs, mental health and the healthcare system
Prescription drug coverage remained the single largest component of health benefits, with insurers paying out more than $18 billion in 2025 - a figure that represents 40 per cent of total prescription drug spending in Canada, according to the CLHIA report.
That total has risen 44 per cent over the past five years, driven by demand for specialty medications and increased claims for treatments related to inflammatory conditions, diabetes, asthma and cancer.
Mental health support spending also posted sharp growth, reaching nearly $1.1 billion in 2025 - up 160 per cent over five years. Paramedical claims, which cover physiotherapy, massage therapy and chiropractic services, grew by nine per cent as demand for ongoing physical and mental health maintenance increased. Eleven million Canadians carried disability coverage, receiving $10.5 billion to replace lost wages.
Frank argued that the scale of private health benefits is still underappreciated as part of Canada's broader healthcare infrastructure. "Most Canadians don't think of health benefits as part of the healthcare system," he said. "But when 27 million Canadians use their benefits for everyday care - from prescriptions and mental health support to physiotherapy and disability coverage - they get care earlier, achieve better health outcomes and help ease pressure on the system."
Advisors and planners working with group benefits clients may find these figures useful context when discussing plan design with employers. Coverage of prior CLHIA annual reports on Wealth Professional shows the benefit total has grown by more than 50 per cent in just five years, reflecting both population coverage gains and cost inflation in the health sector.
Retirement assets and the annuity opportunity
The retirement segment is where the numbers are most significant for financial advisors. CLHIA member companies managed private pension assets valued at over $470 billion in 2025 - up from a decade ago when assets hovered closer to $300 billion. Group retirement plans accounted for $57.7 billion in benefit payments, while individual plans distributed more than $26.1 billion.
Segregated funds now represent 85 per cent of assets held within retirement plans, up from 80 per cent a decade ago, growing at an annualised rate of 7.1 per cent over that period.
For advisors recommending decumulation strategies, that trajectory signals continued client appetite for guaranteed and insurance-protected income vehicles. Industry data previously reported on Wealth Professional confirms that annuity and segregated fund growth has outpaced both life and health premium segments consistently.
The CLHIA report noted that 84 per cent of life insurance - totalling $6.2 trillion in coverage across 23 million Canadians - is purchased through individual agents and advisors. The average life insurance protection per Canadian household stood at $533,000 in 2025, up from $509,000 in 2024, approximating five times average household income.
Infrastructure, taxes and the capital story
Beyond the client-facing benefits data, the report underscores the industry's macro-economic role - relevant context for advisors positioning insurance solutions within broader wealth planning conversations.
CLHIA members held $108 billion in provincial, territorial and municipal government bonds and $25 billion in federal government bonds in 2025. A further $51 billion was invested in Canadian infrastructure - transportation, energy and communications networks - making the insurance industry one of the country's most significant long-term capital providers.
The industry's total capital ratio stood at 136 per cent in 2025, well above the regulatory supervisory target of 100 per cent set by the Office of the Superintendent of Financial Institutions (OSFI). Insurers also contributed $12.7 billion in federal and provincial taxes during the year and employed more than 180,000 Canadians.
On the fraud side, CLHIA reported that joint investigations between member companies increased 150 per cent and that data from over 205 million claims was analysed using artificial intelligence, generating more than 17,000 alerts for potential fraud - a sign that the industry is investing heavily in protecting the affordability of benefit plans.
Wealth Professional's coverage of life insurance benefit trends over the past decade provides additional context for advisors tracking the industry's long arc of growth.
The full CLHIA 2026 factbook is available at clhia.ca/facts.
