The P&C reinsurance cycle is \u201cvery much\u201d continuing the softening trends that began in 2023, said Guy Carpenter\u2019s Laurent Rousseau, with the reinsurance broker also forecasting increased demand for frequency cat protection.<\/p>\n
Guy Carpenter logo is seen in this illustration taken February 3, 2025. REUTERS\/Dado Ruvic\/Illustration<\/p>\n
\u201cSince then, reinsurance capital supply has been growing faster than demand for reinsurance. In view of this context and the current reinsurance landscape, the question is how far and how fast the market will soften in the 2026 renewal,\u201d Rousseau, CEO of EMEA and global capital solutions at Guy Carpenter, said at a media briefing on Wednesday.<\/p>\n
\u201cOur current view is that the likeliest scenario is continued softening in the market. In particular, it is likely that price decreases will accelerate and terms and conditions will broaden, but in an orderly manner.\u201d<\/p>\n
Rousseau noted that traditional reinsurance capital continues to grow at pace, bolstered by strong underwriting results and retained earnings, while alternative capital continues to grow steadily.<\/p>\n
\u201cFinancial investors have played an increasingly growing role in the P&C (re)insurance industries, regardless of rate evolution over the past 20 years. This shows that alternative capital has not yet reached its full capacity and will likely be growing,\u201d he said.<\/p>\n
While overall reinsurance demand is increasing, this is at a slower pace than capital supply owing to the \u201cdampening effect\u201d of insurers\u2019 increased retentions in order to fuel earnings growth, he added.<\/p>\n
\u201cIncreased retentions have already translated into increased volatility,\u201d Rousseau said. \u201cThis is the normal course of business we’ve seen in past cycles, and we should be expecting to see that continue, requiring insurers to have scale and diversification to absorb increased volatility.\u201d<\/p>\n
Rousseau also forecast increased M&A activity.<\/p>\n
\u201cThe M&A spree has already been active in the insurance broking industry and will likely extend to risk carriers,\u201d he said. \u201cAs pricing tailwinds slow down, inorganic deals are likely to provide growth opportunities to insurers and reinsurers alike.\u201d<\/p>\n
FREQUENCY CAT COVER<\/p>\n
In the property cat market, David Duffy, president, global clients at Guy Carpenter, indicated that the 2026 renewals season is expected to see increased demand for frequency cat protection.<\/p>\n
While catastrophe retentions have remained generally consistent with 2024 levels in currency terms, Duffy said that inflation and underlying property values have resulted in an increase in the probability of attaching most catastrophe programs.<\/p>\n
The moderation of risk-adjusted pricing during 2025 has seen pronounced reductions seen in more risk-remote layers, with Duffy adding that competition for share allocations on client programs has helped to produce more consistency in negotiated contract coverage across reinsurer panels.<\/p>\n
\u201cSubject to normal loss activity for the balance of the year, we currently expect the property reinsurance market in 2026 to continue to be guided by the trends observed in 2025,\u201d he said.<\/p>\n
\u201cWe project returns on capital allocated to property reinsurance lines will exceed reinsurers’ cost of capital, resulting in increased appetite for property risk on the part of reinsurers and risk-adjusted rate reductions for clients with good loss experience,\u201d Rousseau added.<\/p>\n
Duffy said that absorbing the financial volatility associated with the frequency and severity of cat losses continues to be a \u201cprimary challenge\u201d, adding: \u201cDuring 2025, we saw a growing willingness on the part of reinsurers to provide frequency cat protection to insurers to meet this challenge.\u201d<\/p>\n
\u201cIn 2026, we expect to see increased demand from insurers for coverage to protect earnings against cat frequency. Reinsurers’ ability to meet client coverage needs in this area will be an important differentiator for reinsurers seeking to grow in a competitive market environment.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"The P&C reinsurance cycle is \u201cvery much\u201d continuing the softening trends that began in 2023, said Guy Carpenter\u2019s…\n","protected":false},"author":2,"featured_media":112488,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[84,467,56,54,55],"class_list":["post-112487","post","type-post","status-publish","format-standard","has-post-thumbnail","category-markets","tag-business","tag-markets","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/112487","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=112487"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/112487\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/112488"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=112487"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=112487"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=112487"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}