2025 Reinsurance Renewals: Competitive Market Sees Rate Cuts

Reinsurance buyers generally experienced a more competitive reinsurance market at the July 1 renewal compared to recent years, with capacity available even where demand increased, and reinsurers looking to grow, according to Gallagher Re’s 1st View mid-year renewal report. Beinsure analyzed the report and highlighted the key points.

Insurers were largely able to secure risk-adjusted rate reductions for property treaties and were well-placed to hold pricing broadly flat in casualty lines – in part, as underlying pricing increases continue to flow through to reinsurers.

With these conditions in place, clients had the opportunity to challenge the status quo, and secure improvements to the structure and terms of their property and specialty reinsurance programs, according to Global Reinsurance Market Report.

Reinsurers came into the renewal in good financial shape

They reported strong results for 2024, with ROEs well above the cost of capital.

Q1 results were weaker due to the impact of January’s unprecedented wildfires in Los Angeles, California, but barring further exceptional cat events, reinsurers remain on track for another good year overall, total reinsurance dedicated capital hit a new peak of $769 bn at the year-end 2024.

As noted in Gallagher Re’s Reinsurance Market Report in April, reinsurers are currently on track to deliver healthy ROEs in the mid-teens for 2025, with traditional reinsurance capital set to increase by another 6% (assuming average results for the rest of the year).

• $769 bn — Total reinsurance dedicated capital at year-end 2024, reaching a new peak.

• 10–15% — Average risk-adjusted rate reductions achieved on property reinsurance at July 1, 2025 renewals.

• $56 bn — Global insured catastrophe losses in Q1 2025, driven largely by the Los Angeles wildfires.

• $15.2 bn — H1 2025 cat bond issuance through June 13, up 36% year-on-year.

• $4 bn — Growth in non-life ILS assets under management in Q1 2025, supporting additional capital supply.

The increase in reinsurance dedicated capital

The increase in reinsurance dedicated capital has been driven mainly by retained earnings at the traditional reinsurance groups, rather than new entrants or capital raises.

But capital supply has also been supported by further inflows into the ILS market, with $4 bn of non-life ILS AUM growth in Q1 supporting $15.2 bn in H1 cat bond issuance through June 13, up 36% year-on-year.

Global reinsurers are also collaborating with insurers to utilize non-traditional capital vehicles, such as sidecars, where interest in accessing insurance risk remains robust.

Whether or how broader macroeconomic conditions impact the (re)insurance industry through 2025 and beyond was a topic of discussion in mid-year renewal negotiations.

To support appropriate outcomes relative to this uncertainty, cedants were largely successful in articulating their approach to fluctuating conditions within their underwriting, mitigating the need for additional adjustments.

Property reinsurance and property cat losses

After several years in which the share of incurred property cat losses has skewed to primary insurers, market conditions were favorable to better address buyer needs at this renewal.

Reinsurers were looking to balance their appetite for growth with their objective of orotecting profitability. The result was risk-adjusted rate reductions around 10-15% on average.

While this reflects the broader outcome, individual renewals remained highly dependent on their own characteristics, continuing the trend of more diverse results at a granular level.

This calculation also reflects structural adjustments such as shifts in attachment points, and where quantifiable, improvements in terms and conditions.

Reinsurers showed greater confidence

Reinsurers showed greater confidence in those cedants who articulated the actions they have taken to improve performance, and how their actions tangibly improve future performance.

Yet there was a clear market divide. For cedants unable to provide evidence on how they are tackling the performance issues, outcomes were less favorable.

That puts a premium on not only articulating, but also crucially quantifying, the impact of these strategic improvements.

Gallagher Re has been working closely with our clients to evidence the impact of these shifts, from overhauling claims practices, to changes in business mix by geography or industry.

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FULL Report - https://beinsure.com/reinsurance-renewals-competitive-market/