- J.P. Morgan expects property catastrophe reinsurance rates to decline by 120% at January 2027 renewals, although the pace of reductions could moderate after accelerating throughout 2026.
- Insured catastrophe losses totaled approximately $15 bn in Q2 2026, marking the fifth consecutive quarter below $20 bn, while outstanding catastrophe bond capacity exceeded $61 bn.
J.P. Morgan expects property catastrophe reinsurance rates to fall up to 20% at the January 2027 renewals, with continued pressure from abundant capital, relatively low catastrophe losses and increasing competition. Gallagher Re estimates that the global reinsurance industry would need to experience an additional $50-75 bn in catastrophe losses during the second half of 2026 to bring returns down to the market’s cost of equity for the year.
Reinsurance pricing remains under pressure across property catastrophe and specialty lines. J.P. Morgan expects further declines unless a sufficiently large catastrophe event occurs late in 2026 alongside significant capital market volatility.
Global property catastrophe reinsurance rates fell by an average of 12-15% at the January 2026 renewals, according to major broker indices, ReinsuranceNews noted. Loss-free programs obtained reductions of up to 20% in some regions, with the downward trend accelerating at midyear.
Reinsurance buyers expect property pricing to fall further at the January 2027 renewals, with double-digit reductions increasingly entering negotiations, according to Moody’s annual survey.
Casualty looks less settled. Persistent loss-cost pressure, especially across U.S. liability business, has divided buyers over the direction of pricing. Moody’s survey found market conditions remain favorable for buyers heading into 2027.
For property reinsurance, 86% of respondents expect prices to decline again in 2027. That compares with 74% in Moody’s 2025 survey.
Natural catastrophe risk remains a major source of reinsurance demand. Insured catastrophe losses have been increasing at an annual rate of 5-7%, driven by greater exposure, higher asset values and shifts in hazard patterns.
Swiss Re’s modelling puts a 2026 peak-loss scenario at around $320 bn in insured losses. The estimate shows the scale of protection required for rare events with severe loss potential.
A sequence of hurricanes also creates large annual losses without producing a single record event. Storm clusters similar to Harvey, Irma and Maria in 2017 would push annual insured losses above $120 bn.
Global reinsurance under pricing pressure in 2026, while U.S. P&C insurance stays stable despite slower growth, softer underwriting profits and earnings, Beinsure noted.
When accounting for the excess capital accumulated over recent years, the estimated additional catastrophe loss requirement increases to nearly $150 bn.
Reinsurance contract terms and conditions have generally remained stable despite declining prices, according to J.P. Morgan. Some easing has emerged in aggregate covers, although attachment points on excess treaties have remained broadly unchanged.
The bank is also monitoring the expanding participation of alternative third-party capital providers, including captive reinsurers and brokered facilities partially financed by private credit firms.
J.P. Morgan expects these emerging capital arrangements to have potentially negative implications for the traditional reinsurance market as additional capacity increases competition.
Strong underwriting conditions during the first half of 2026 have left many reinsurers well positioned to meet their annual earnings targets.
Reinsurance pricing in 2026 has seen a rapid pick-up in the speed of prices falling, with the January renewals showing a 12% decline based on Guy Carpenter data, with this level moving to 16% at the midyear renewals.
The expected moderation in price reductions during January 2027 would offer some relief to reinsurers, although J.P. Morgan sees limited evidence of a sustainable pricing floor.
Insured catastrophe losses remained relatively subdued during the second quarter of 2026. J.P. Morgan estimated total insured losses at approximately $15 bn, marking the fifth consecutive quarter in which quarterly catastrophe losses remained below $20 bn.
The estimate was based on a bottom-up assessment of major catastrophe events, with severe convective storms (SCS) in the United States accounting for approximately 90% of the quarterly total.
SCS-related insured losses have remained elevated compared with historical levels before 2023. J.P. Morgan estimated that these events generated approximately $64 bn in insured losses during 2023, followed by more than $50 bn in 2024 and around $49 bn in 2025.
Despite the continuing financial impact of severe convective storms, the bank identified no major second-quarter 2026 catastrophe events large enough to qualify as significant reinsurance loss events.
The relatively light catastrophe experience has supported underwriting profitability but has also reduced the likelihood of a recovery in reinsurance pricing.
“Lower catastrophe claims, even though good for the profitability of reinsurers, can also be bad news, as they will not help with declining prices and will likely lead to more pricing pressure,” J.P. Morgan stated.
Capital availability has added to competitive pressure. Record levels of reinsurance capital have strengthened the negotiating position of cedents, allowing insurers to obtain more favorable pricing and risk transfer arrangements.
Outstanding catastrophe bond limits exceeded $61 bn during the first half of 2026, contributing to the supply of alternative risk transfer capacity.
Florida Citizens Property Insurance Corporation finalized its 2026 risk transfer program at $2.816 bn, with newly placed coverage priced approximately 30% below comparable protection purchased a year earlier.
The combination of available capacity and relatively limited catastrophe losses has contributed to faster pricing reductions across the property catastrophe market.
J.P. Morgan expects companies to use some of their anticipated profitability to reinforce reserve positions and establish additional financial cushions during the second half.
“Therefore, as companies are likely to be well on the way to achieving their profit goals for the year, we expect that the reinsurers will seek to ‘manage’ earnings in the second half of 2026 via additions to reserve buffers and other areas that allow the build-up of prudence,” the report stated.
Competitive pricing conditions are also affecting the primary commercial insurance market. J.P. Morgan identified commercial property as the segment experiencing the strongest competition, although premium rate reductions have spread across other lines of business and accounts of different sizes.
Commercial property insurers experienced particularly substantial premium increases and margin improvements during the hard market, leaving the segment exposed to stronger downward pricing adjustments as competition intensified.
Casualty insurance rates have also been declining, but more gradually. J.P. Morgan attributed the difference partly to comparatively weaker profitability in casualty business, which has provided less scope for reductions than in commercial property.
Looking ahead, the bank noted that the 2026 Atlantic hurricane season was forecast to be lighter than average because of El Niño conditions. A relatively uneventful season would provide limited support for reversing the decline in reinsurance rates.
While profits are expected to be strong in 2026, at this stage there is little, in our view, to show that a floor will be found on pricing in the near term.
The bank expects pricing trends to remain closely linked to actual catastrophe loss experience. Without a substantial insured loss event or meaningful disruption to capital markets, competitive conditions are likely to persist into the January 2027 renewals.
