Jan. 1 renewals set stage for lower reinsurance prices in 2026

Property-catastrophe reinsurance prices will likely decline at the remaining renewal dates in 2026, after double-digit percentage declines at the Jan. 1 renewals.

Gallagher Re's global property-catastrophe rate-on-line index, which measures price as a percentage of exposure, fell 15% at Jan. 1. Similar indices from fellow reinsurance brokers, Howden Re and Guy Carpenter & Co. LLC, fell 14.7% and 12%, respectively. A surplus of reinsurance capacity relative to demand drove the price reductions, according to brokers.

"I think that supply-demand imbalance is going to be there for 2026," David Duffy, president, global clients at Guy Carpenter, said in an interview. "You've clearly set the tone for the year."

Giving more away

Jan. 1 is the biggest renewal date of the year, when roughly 50% of the world's reinsurance renews. While the renewal is global, it is more heavily weighted to European business than subsequent dates. The April 1 renewals are more focused in Asia-Pacific, while the midyear June 1 and July 1 dates skew more toward US business.

This is the second consecutive Jan. 1 renewal where property catastrophe prices have fallen. This follows a sharp increase in pricing and more restrictive coverage at the Jan. 1, 2023, renewals.

Prices were widely expected to fall on Jan. 1, 2026, but indications in the months leading up to the renewals suggested the softening would be greater than anticipated. The large, listed reinsurers prepared shareholders for a 10% price reduction in their third-quarter earnings comments, Mike Van Slooten, head of market analysis at Aon PLC's reinsurance solutions division, told Market Intelligence in December.

The share prices of the big four European reinsurers have fallen since the beginning of December 2025, and the decline accelerated after the renewal outcomes became clear.

"There was a bit more give in the pricing than people had potentially budgeted for when we were at Monte Carlo or through the fall conference season," Lara Mowery, chief commercial officer at Gallagher Re, said in an interview.

As predicted before the renewals, reinsurers were also willing to be more flexible on coverage, even though many insurers opted for savings on their reinsurance spend rather than broader coverage.

However, there were limits to reinsurers' pricing and coverage flexibility. "It wasn't just 'anything goes'," Mowery said. "Reinsurers did walk away from certain types of changes or things that just didn't actually match the parameters they were comfortable with." "There was still underwriting discipline that held through the process."

Crucially, attachment points — the level at which property-catastrophe reinsurance starts to pay out — remained relatively stable. Reinsurers raised attachment points along with prices at Jan. 1, 2023. This shift left insurers retaining a far bigger share of the claims bill for smaller, more frequent natural catastrophes, such as fires and floods, and contributed significantly to the profitability reinsurers have enjoyed since. These smaller, more frequent catastrophes, known in the industry as secondary perils, accounted for a large portion of annual global insured natural catastrophe losses in recent years. The Los Angeles wildfires in January 2025 were the largest loss of the year and severe convective storms accounted for $50 billion of the $107 billion of global insured catastrophe losses that year, Swiss Re estimates.

"For many buyers, retentions didn't change," Duffy said. "The biggest single gain that reinsurers made as a result of the reset of structures and pricing at Jan. 1, 2023, was the increase in retentions."

Before 2023, reinsurers paid an average share of about 20% of global insured catastrophe losses, which has since dropped to 12%, according to Duffy. "It's been pretty consistent: 2023, 2024 and now 2025, even with the LA wildfires," he said.

The pricing floor

Although property-catastrophe reinsurance prices fell again at Jan. 1, they are still above pre-2023 levels and remain well above previous lows. Pricing levels are 50% higher than the 2018 low, Gallagher Re said in a report on the renewals.

Reinsurers have given back roughly half of the price increases achieved at Jan. 1, 2023, according to David Flandro, head of industry analysis and strategic advisory at Howden Re, estimates. "It isn't as if property-cat reinsurance is unprofitable," Flandro said in an interview. "It's just coming off of the highest pricing peak we have perhaps ever seen."

While share prices have fallen, analysts' estimates for the big four European reinsurers' 2026 profits have not declined sharply compared to Dec. 1, 2025.

Even so, the price declines on Jan. 1, 2026, have triggered questions about how much further prices may fall before they become inadequate for the risks reinsurers are taking on. The price falls at Jan. 1 were not only evident in the property-catastrophe business: most areas of the reinsurance market saw price decreases, Howden Re's report said.

The reinsurance industry's collective economic value added — return on capital minus the cost of capital — is still positive and in the low single digits, Flandro said, indicating reinsurers are still creating economic value by writing business. "But the floor isn't very far away," he added. "If the market is rational, we won't go through it, but sometimes human nature is that we have the tendency to overcorrect."

Reinsurers are still on the right side of the price adequacy line, but remain wary of crossing it. Mowery said there is no one-size-fits-all answer to where the line is, given the changes in reinsurance pricing and structures, shifting views of risk and the adjustments primary insurance companies have made to their own portfolios in response. "[Reinsurers] are definitely looking at it though and being sensitive to it and keeping line of sight on where, for them, that line is."

The global risk environment in 2026 could prevent prices from slipping too far. Not only are annual global insured catastrophe losses now routinely above $100 billion, but the range of global conflicts and tensions is growing, which increases the potential for large claims.

"The risk premium in the world is just higher; there are more things that could go wrong," Flandro said. This risk level "could also, in theory, be conducive to creating a floor under rates," he added.

Significant events that produce a large claims bill could alter the renewal outlook for the rest of the year. "If current conditions persist, it's reasonable to expect pricing conditions in reinsurance to persist for the next few renewals in terms of April 1, June 1 and July 1, but that's highly contingent on events as always," Flandro said.