It’s a trend that used to feel like an American problem, but Canada is now seeing a rise in lawsuits. In 2022–23, there were 768,615 active civil cases in Canadian courts. This is a number that highlights the growing congestion in the system. Still, more lawsuits don’t necessarily mean more courtroom victories—or bigger payouts. So, why aren’t Canadians seeing U.S.-style payouts? Let’s examine Canada’s lawsuit surge: why courtrooms are seeing more claims, but fewer dramatic financial rewards.
Claims Frequency On the Rise
Oren Schemool leads professional liability lines at HDI Global SE Canada. He says his company has noticed a clear trend: “We have not experienced increased payouts on claims, but we have seen a greater frequency of claims.” The upward pressure is visible. Business surveys indicate that civil claims have increased by more than 200% in recent years. This is in comparison to a 2015 baseline. And Canadians appear less hesitant to sue, even when defendants may be financially vulnerable: one survey found that 69.8% of people said a small business’s financial instability would not stop them from filing a claim.
At the professional level, it’s not unheard of for a single law firm to receive 30, 40, or even 50 notices of legal action in a year. But most of those cases never escalate beyond the first layer of insurance coverage, often settling under Ontario’s Lawyers Professional Indemnity Company. That means Canada isn’t yet facing the runaway litigation costs seen in the U.S.
Why Canadians Aren’t Cashing In On Lawsuits
Unlike the United States, where high-profile lawsuits can yield eye-popping damages, Canada’s legal system is less favorable to plaintiffs. Insurance structures like LawPro absorb many of the smaller claims before they balloon. Damage awards are also smaller. In 2023, the record for punitive damages in Canada was about $1.5 million—a fraction of the “nuclear verdicts” often delivered by American juries. Culturally, Canadians remain less litigious than their U.S. counterparts, even if the gap is narrowing. But the landscape is showing signs of change. Industry insiders say that most cases are settled quietly and at relatively low cost, far from the multimillion-dollar verdicts often seen in the United States.
The Funding Factor
The rise of third-party litigation funding is prompting new concerns in Canada. A report by global law firm Dentons LLP, commissioned by the Insurance Bureau of Canada (IBC), warns that law firms are increasingly relying on outside financing to pursue lawsuits that might otherwise never reach court. “Law firms are increasingly using third-party litigation funding to pay to pursue claims that would likely not be pursued otherwise,” explained Liam McGuinty, vice president of strategy at IBC.
Litigation funding is now often used as a profit-generating tool—largely without regulatory oversight. The Dentons report cautions that unchecked growth could drive up the cost and structure of property and casualty insurance. The report also offers a southern perspective. In the U.S., the Chamber of Commerce has estimated that lawsuits cost the economy 2.1% of GDP, or approximately $4,207 per household. Dentons warns Canada is showing similar warning signs, from a marked increase in class actions to aggressive legal advertising campaigns that encourage claims.
Other Pressures on the System
Even without U.S.-style payouts, lawsuits are becoming costlier in Canada. Inflation is driving up lawyers’ hourly rates, expert witness fees, and other litigation expenses. For insurers, that means higher costs to defend claims—even if settlements remain modest. Schemool notes that while insurers try to raise premiums to offset these expenses, pushback from clients sometimes forces companies to absorb the difference. That erodes profitability and could drive long-term changes in liability coverage. Meanwhile, expectations are shifting. A Norton Rose Fulbright survey found nearly half of corporate counsel in Canada expect an increase in lawsuits or regulatory investigations in the coming year. As a result, legal departments are bracing for more pressure.
Canada’s Lawsuit Surge: The Bottom Line
For now, Canadians may be quicker to sue. However, they’re not seeing the kind of big-dollar payouts that dominate U.S. headlines. Still, with Canada’s lawsuit surge on the rise, class actions expanding, and inflation adding pressure, experts say the ground may be shifting.
Understanding these trends is crucial for insurance brokers in the future. From rising claims frequency to Canada’s lawsuit surge funding and inflation-driven legal costs, our isure brokers can help guide you toward coverage that truly protects. By staying informed, our staff ensure that our clients are prepared for evolving risks while keeping premiums manageable.
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