Hard Market Reset: The Reinsurance Landscape Ahead

What’s happening in the unfolding dynamics of the global reinsurance market? In this session at RIMS 2026, Dan Hoffmeiser, Director at AM Best, reviewed the attractive market conditions, despite modest declines in risk-adjusted pricing for property catastrophe covers. Attendees considered whether disciplined underwriting—with terms, conditions and attachment points largely intact—will last and the key drivers that could shift that outlook.

Market Segment Outlook Revised to Stable from Positive – Headwinds

• Accelerated softening in property reinsurance pricing in, accompanied by modest relation of some terms and conditions.
• Persistent social inflation and corresponding historical reserve and pricing insufficiency in certain large subclasses of casualty lines of business.
• Continued elevated frequency and severity of weather-related events, underscored by six consecutive years of global insured catastrophe losses exceeding $100 billion.
• Macroeconomic uncertainty, including inflation pressures, shifting monetary policy, and potential volatility in financial markets.

Market Segment Outlook Revised to Stable from Positive – Tailwinds

• Terms and conditions and attachment points are largely intact.
• Reinsurers’ risk adjusted capital positions remind robust, bolstered by retained earnings and prudent capital deployment.
• Limited new market entrants help preserve rate integrity and new capacity from eroding underwriting margins.
• Elevated interest rates continue to amplify earnings, complementing underwriting results.
• Life and health reinsurance operations continue to act as a diversifying source of income and earnings.

Challenges and Opportunities

Challenges

• Casualty reserving
• Macroeconomics and geopolitical risks
• Climate risks
• AI
• Cyber risks
• Private credit

Opportunities

• Efficient capital markets
• Addressing the protection gap
• Changing demographics
• Technology, AI
• Cyber and “new” markets

Expectations

• Operating results remain solid – exceeding cost of capital
• Rate movements – continued moderate property rate eclipses; casualty rates in line with trends
• Terms & conditions – some broadening, but retentions remain
• Dedicated capital – driven by established players and ILS
• Geopolitical and macroeconomics – uncertainty remains
• Alternative capital – embedded in capital structures

What Could Change This Outlook?

• Broad and significant rate reductions
• Looser terms and conditions
• Lower attachment points into working layers
• Expected RoE or below cost of capital
• Combination of the above