The reinsurance sector is set to undergo a new phase as the availability of deployable capacity within the marketplace marks a shift from the extended period of rate increases, a recent report by global insurance intermediary group Howden found.
In its 2025 market report “Past the Pricing Peak”, Howden found that favorable supply dynamics were more evident within the markets of commercial insurance and reinsurance over the last 12 months. This was important within the January 1, 2025, reinsurance renewals as it fostered competition, thereby leading to risk-adjusted rate reductions in various sectors.
With a booming underwriting environment, the performance of the market continues to be robust. Buyers can expect to see such favorable market conditions in most lines of business in 2025.
“The re/insurance market continues to present significant opportunity for growth. Companies across the sector are executing strategies that not only meet their cost of capital but, in many cases, exceed return hurdles. Investors should view the sector as one rich with growth potential and attractive opportunities,” said Howden Re CEO Tim Ronda.
The Howden report found that there was a notable softening with the demand for reinsurance driven by volatile loss experience, rising exposures and model changes. As markets were adopting a more granular approach, there was a notable differentiation by client and programme.
The risk-adjusted global property-catastrophe reinsurance rates-on-line saw a decrease by 8% on average. The US saw favorable conditions for buyers, leading to risk-adjusted price decreases that ranged from a decrease of 7.5% to 15%. For Europe, the loss-free programmes secured rate reductions saw an average of decreases ranging from 3% to 15%.
Property retrocession continued its trend of a profitable and largely loss-free year, with risk-adjusted pricing falling between 10% and 20% on average. Meanwhile, the global direct & facultative market saw risk-adjusted pricing that was down by 10% and 15% on average. Casualty reinsurance renewals in the US saw the market shaped by heightened scrutiny of litigation risks and loss cost while international renewals benefitted from the abundance in supply and the strength of underlying fundamentals.
Specialty reinsurance in marine and energy, cyber, aviation and war, political violence, and terrorism lines benefitted from the strength of the results seen in underlying portfolios and ample capacity. However, the trade credit and political risk market were still facing capacity restraints as renewals saw modest changes to pricing and terms in excess-of-loss and pro rata programmes.
“Our report is something of a wake-up call for the industry. Carriers have experienced strong growth for the best part of a decade now but, as we show today, a reliance on price alone is no longer enough to sustain that momentum,” said Howden founder and CEO David Howden (pictured).
“Greater emphasis on innovation, on collaboration and on listening to the needs of the customer will mean a win-win-win for clients, society, and insurance companies alike,” he added.
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