1.1 renewals: Five early takeaways from this year’s broker commentary
(The Insurer) - The Insurer examines five key talking points from the 1.1 renewals, as highlighted by the preliminary reports from Aon, Gallagher Re, Guy Carpenter and Howden.
Increased availability of capacity was a major factor in driving property reinsurance rate reductions, according to early broker commentary.
Dedicated reinsurance capital was up 6.9 percent at year-end 2024 according to Guy Carpenter in partnership with AM Best, while Aon noted that capacity was further bolstered by an easing of retro market conditions.
The expanded supply of capacity was “more than sufficient to meet continued growth in global demand,” Aon said, allowing reinsurers to show greater flexibility.
Howden characterised the January 2025 renewals as “past the pricing peak”, while Gallagher Re said differentiation was rewarded as reinsurers "assess[ed] each risk and client relationship on its own merits."
“Overall, cedants continue to manage reinsurer partnerships holistically – trading across product lines and treaties,” Guy Carpenter noted, arguing this was critical in an environment where market conditions vary across different lines.
Below we highlight five key talking points from the broker reports:
1. Property rates reduced overall
After 2023’s major correction and single-digit rate increases in January 2024, reinsurance brokers have reported rate reductions for loss-free property programs.
Risk-adjusted rates for property cat dropped 8 percent at the 1 January renewals, according to Howden’s pricing index.
“Property catastrophe renewals were consistently oversubscribed,” Guy Carpenter said, with reinsurers’ appetite increasing by to 10 to 15 percent while demand grew by around 5 percent.
Gallagher Re observed no meaningful changes to purchasing strategies, but said that some buyers explored coverages that were prohibitively expensive for them last year, such as high-layer catastrophe aggregate covers.
The impacts of recent natural catastrophes on renewals “were largely confined to the most affected local markets,” Aon said, highlighting Canada, central and eastern Europe and the United Arab Emirates.
Whilst an active Atlantic hurricane season caused significant damage in the US, particularly from hurricanes Milton and Helene, much of these losses were retained by insurers. The impact of those events was limited for programs renewing at 1 January, Howden said.
In Europe, the US and Canada, there was adequate capacity for loss-impacted layers, Guy Carpenter said, with risk-adjusted rate changes from flat to 30 percent increases.
Rate reductions for loss-free property programs
Aon | In the Property sector, cedants with loss-free programs were able to secure catastrophe coverage on incrementally improved terms. Reinsurers’ desire to grow created opportunities for buyers to align coverage and purchase additional protection |
Gallagher Re | In the US... Loss-free programs typically experienced risk-adjusted single digit decreases on average, compared with single-digit increases in 2024; loss-impacted programs were more dependent on individual account circumstances and experienced a wider range of outcomes but on average renewed with low teens increases, compared with +35 percent to +40 percent the year before |
Guy Carpenter | Non-loss-impacted property catastrophe renewals saw notable risk-adjusted reinsurance rate reductions of 5% to 15% at January 1. However, there was a range of pricing outcomes that varied by region, attachment point and reinsurer views of price adequacy |
Howden | Pricing in the property market saw meaningful reductions from last year’s corresponding renewal, with loss-free risk-adjusted rate change typically falling within a range of down 5% to down 15%. Any major deviation from this range was informed by loss experience (loss-affected programmes saw sizeable increases) and performance |
Source: The Insurer
2. Capacity for lower layers remained limited
Howden and Gallagher Re noted that competition was strongest in the higher layers of property programs. Reinsurers continued to have reduced appetite for frequency perils after demanding substantially higher attachment points in 2023, which remained steady in 2024.
This continued discipline was one of the drivers of rate reductions elsewhere, according to Guy Carpenter. The reinsurance broker said supplemental purchases that cedants can make to buy down their retentions now “play an important role in bringing balance to the market”.
Gallagher Re agreed that there was "no measurable erosion" in attachment points for core programs, but said that more reinsurers were willing to offer buydown solutions to "selected buyers".
In the US, Howden said that some cedants leveraged access to higher layers to secure lower-layer protection, a strategy that was “often successful… particularly for strong performers”.
“Many cedants saw improvement in underlying terms and conditions to their contracts like minimum premiums and improvement in coverage for secondary perils,” it added.
Reinsurer appetite limited for lower layers
Gallagher Re | Low(er) level occurrence and aggregate protections experienced an increase in the number of reinsurers providing support on both a structured and traditional basis for selected buyers. However, there was no measurable erosion in core program attachment points |
Guy Carpenter | Rate reductions and additional capacity reflect strong reinsurer appetite driven by… continued reinsurer discipline around property catastrophe program attachment points and pricing |
Howden | Capacity for lower layers and frequency protection was narrower, although there was a noticeable increase in appetite to support cedents compared to last year |
Source: The Insurer
3. Differentiation drove varied outcomes in casualty
Despite signs of reinsurers reducing their appetite for casualty risks ahead of the renewals, brokers reported varied outcomes at the January renewals.
In the US, Aon said “robust underlying insurance pricing helped to offset reinsurer concerns around adverse claims and litigation trends”, with rates stable overall.
The casualty renewals were “marked by differentiation”, Howden said, with outcomes “ultimately determined by loss experience, underlying rate change and reserve deployment on individual portfolios” in the US.
Howden’s London market casualty reinsurance index saw a marginal reduction in risk-adjusted rates.
Buyers that used evidence to show their portfolios were more profitable than in the past achieved the best pricing, Gallagher Re said.
"Perhaps more importantly, they also obtained preferred treatment in capacity allocation in a market where some reinsurers were looking to pare back capacity and others were looking to selectively grow," it added.
Guy Carpenter observed flat to small decreases in ceding commissions for proportional structures, while excess of loss general liability and excess/umbrella placements faced pressure on treaty terms.
Variation in casualty reinsurance renewals
Aon | Casualty renewals were broadly stable overall, even in the U.S., where robust underlying insurance pricing helped to offset reinsurer concerns around adverse claims and litigation trends. Individual cedant outcomes varied, depending on loss experience, business mix and data quality |
Gallagher Re | Reinsurers continued to scrutinize the underlying trends and dynamics of the casualty market at the 1.1.2025 renewal, and differentiated cedants that were able to provide evidenced-based arguments that their portfolios were performing better than a tabular assessment might suggest |
Guy Carpenter | Although casualty reinsurance programs were an area of market concern, year-end renewals were completed with varying outcomes. Proportional casualty structures generally experienced ceding commissions that were flat to slightly down. However, excess of loss general liability and excess/umbrella placements continued to face pressure on treaty terms |
Howden | For all the focus on price and reserve adequacy in the US market in the run-up to renewals, cedents able to satisfy reinsurers’ criteria around claims development and underwriting performance achieved as expiring or even improved terms |
Source: The Insurer
4. Reinsurers looked to grow in specialty
“Most reinsurers continue to view specialty business as a source of diversifying growth,” Aon said, resulting in rates that were generally stable or reduced in some cases.
Strong results in underlying portfolios were also a driver of the easing reinsurance market for some specialty lines, Howden added.
This comes despite some uncertainty around losses from ongoing conflicts and increased geopolitical risks. In the marine and energy, and war, PV and terror markets, an abundance of follow capacity led to downward pricing pressure, Howden said.
Cedants “successfully pushed back against the applicability of escalation clauses which had failed to be triggered despite ongoing tensions and events in the Middle East,” Howden said, while some SRCC event definitions were expanded.
The broker also said there were only “modest changes” to pricing in the trade credit and political risk reinsurance market, where capacity remained limited.
Specialty reinsurance market favourable to buyers
Aon | Most reinsurers continue to view Specialty business as a source of diversifying growth. January renewal outcomes varied, depending on class of business and loss activity, but pricing was generally stable to slightly lower, with a modest easing of other terms and conditions in some areas |
Gallagher Re | Several years of improved underlying trading conditions and an abundance of capacity seeking growth equal to or even greater than in the property catastrophe sector shifted the negotiating balance in buyers' favor |
Howden | Despite heightened geopolitical risks globally and uncertainty around war-related losses from ongoing conflicts, several specialty lines continue to perform well and saw risk-adjusted rate reductions at 1 January 2025 renewals. This was true in marine and energy, cyber, aviation, war, political violence and terrorism, where strong results in underlying portfolios, combined with robust capacity, tilted conditions in buyers’ favour |
Source: The Insurer
5. Cyber reinsurance structures continued to shift
Cyber was among the classes of business that saw favourable conditions for buyers at 1 January, according to Gallagher Re and Howden. Ceding commissions increased for the quota share covers that dominate the cyber reinsurance market.
The shift towards non-proportional covers, one of the five themes identified in Cyber Risk Insurer’s 2024 year in review, continued at 1 January.
Back in October, Aon Reinsurance Solutions’ head of cyber analytics Rory Egan had said the broker was “seeing a little bit less quota share and a little more interest in the non-proportional space.”
"Cyber renewals at 1.1.2025 saw a strong focus on obtaining the most efficient reinsurance structures," Gallagher Re said
Guy Carpenter said buyers explored event excess of loss and aggregate stop loss structures at the new year’s renewals, while Howden noted that a greater willingness from reinsurers to offer cyber excess of loss reinsurance.
Changes in structure a feature of cyber reinsurance renewals
Guy Carpenter | The cyber reinsurance market remained dynamic and innovative, with buyers exploring a range of blended solutions, from pro rata to event excess of loss and aggregate stop loss structures |
Gallagher Re | Cyber renewals at 1.1.2025 saw a strong focus on obtaining the most efficient reinsurance structures, amid extremely healthy levels of capacity from reinsurers and an improved understanding of tail risk from buyers. Increased competition for both quota share, and excess of loss placements led to successful negotiations for improved terms and more effective coverage |
Howden | For quota share programmes, which continue to be the structure of choice for most cedents, ceding commissions increased by one to two percentage points on average. Perhaps indicative of the market conditions, or maybe reflective of reinsurers’ greater confidence in their understanding of the class, we have seen greater willingness to offer risk excess of loss reinsurance products in support of cyber portfolios |
Source: The Insurer