Howden: Reinsurance rates reset at January 2026 renewals

Reinsurance pricing moved decisively lower at the January 1, 2026 renewals, with risk-adjusted rate reductions across most major lines pushing prices back to levels last seen around four years ago, according to Howden’s latest renewal report, Re-balancing.

Howden estimates average risk-adjusted declines of:

• Global property catastrophe: down 14.7%

• Property retrocession: down 16.5%

• Direct & facultative: down 17.5%

• London market casualty: down 5–10%

The softening comes despite another year of elevated catastrophe losses, including the Los Angeles wildfires, one of the largest insured wildfire events on record. Strong retained earnings, ample capital, and heightened competition allowed most core programs to renew for less than expected, often with solid signings.

Capital Abundance, Disciplined Structures

Across the market, balance sheets remained healthy and reinsurers showed a clear appetite to deploy capital. While pricing eased, attachments generally stayed high and terms remained tighter than in the last soft market, keeping underwriting discipline largely intact.

Many cedents used the savings to either buy supplementary protection at renewal or plan additional purchases later in 2026 to manage retentions and volatility.

Property Cat and Retro: Meaningful Pullback

Property catastrophe saw the sharpest reset, with program-wide decreases typically ranging from 10% to 20% across the US, Europe, and Asia Pacific. Europe experienced the widest dispersion, with France, Italy, Switzerland, and the UK seeing the largest reductions.

Retrocession capacity was more than sufficient, supported by retained earnings, new entrants, and ILS inflows. Risk-adjusted pricing fell by 12.5% to 21%, though reinsurers largely resisted broadening coverage to include non-natural perils.

D&F and Casualty: Softer, But Selective

Direct and facultative pricing continued its downward trend, with average reductions of 15–20%, though reinsurers remained selective when participating lower in programs.

Casualty renewals were more mixed. US treaties largely renewed flat due to long-tail loss concerns, while London market and European excess of loss programs achieved 5–10% risk-adjusted reductions amid strong capacity.

Specialty Lines Mostly Follow Suit

Most specialty lines benefited from favorable conditions, including credit and political risk, cyber, marine, energy, and construction. Aviation was the exception, showing modest firming after loss activity in 2025.

Outlook: Softer, Not Loose

Howden expects current conditions to extend into 2026 absent a major loss or macro shock. While pricing is falling, the market remains sensitive to volatility and capital costs, with reinsurers deploying capacity selectively rather than chasing volume indiscriminately.