Global reinsurance market has held firm despite heavy catastrophe losses, geopolitical shocks and a shaky economy.
Dedicated reinsurance capital is expected to hit about $650 bn by the end of 2025.
Marsh McLennan president John Doyle said capacity is more than sufficient, competition is intensifying, and reinsurers are actively hunting for profitable ways to deploy that capital. It’s not desperation, but it’s close to a feeding frenzy.
Casualty reinsurance renewals came through steady, he added, with capacity meeting demand. That balance, according to him, reflects stricter underwriting from primary carriers and a stronger appetite among reinsurers.
“Clients want strategies that match both risk conditions and their tolerance for volatility,” Doyle said.
He noted falling property casualty prices alongside rising risk costs, warning the trend won’t hold forever. If large losses stay muted and the economy doesn’t shock the system, he expects 2026 to look much like 2025.
Data from the Marsh Global Insurance Market Index showed commercial insurance rates fell 4% in Q3, after another 4% drop in Q2. Property lines drove the decline.
Region by region, the rate picture looked soft across the board – U.S. down 1%, Canada down 3%, UK and Europe mid-single digits, Asia and Latin America similar, Pacific down double digits.
Casualty ran against the grain. Global rates climbed 3%, with U.S. excess casualty up 16% as liability pressures grew. Workers comp dropped 5%.
Property reinsurance rates globally sank 8% year-on-year, a notch steeper than the 7% slide the quarter before. Financial and professional liability fell 5%. Cyber dipped 6%.
Marsh McLennan’s message to clients was blunt – the market may look generous on rates now, but risk is getting more expensive. And reinsurers with capital to burn are only too happy to put it to work.
Motor hull premium rates will also increase in response to high spare-parts price inflation, but increases for liability lines should be more muted as more reinsurance capacity will be directed to this part of the market.
Claims inflation has yet to be pushed up by social inflation or general inflation but we expect this to change in 2025, with negative implications for underwriting margins and reserves. Underestimating claims inflation for liability lines is one of the most significant risks for reinsurers.
The steep rise in interest rates has led to write-downs on large parts of reinsurers’ investment portfolios. This has caused accounting capital to shrink significantly due to the accounting mismatch between assets and liabilities.
However, the impact on economic and regulatory capital has been neutral to positive, and we do not consider the industry’s capitalisation to have suffered.
The write-downs have also depressed investment income, leading to lower reported earnings for 2022, but rising reinvestment yields should gradually boost investment income over time.
