The message from Monte Carlo appears to be preparing the reinsurance market for rate declines of 10-15% at the January 2027 renewals, according to Autonomous, which said that, if correct, this would signal the full reversal of the hard market, at least from a pricing perspective.
In its European insurance report, Autonomous said the annual Monte Carlo Rendez-Vous “arguably fires the opening salvo in negotiations” for January, with attention now turning to 2027 after the main treaty renewal seasons have passed.
The backdrop is a growing pool of capital following several years of exceptional profitability. Aon has estimated total industry capital at $800 billion, up 40% from the 2022 trough, while Gallagher Re has said the market would need to suffer “well over $100bn of excess losses” to bring some stability.
Autonomous said that, with this in mind, there should be no surprise that the outlook remains one of rate softening.
The Marsh Re property-cat index had been signalling rates down approximately 16% through 2026, although Autonomous said that, given such a significant decline, there should be “some natural slowing”, with the message from Monte Carlo appearing to prepare the market for a further 10-15% fall.
“If correct, that would signal the full reversal of the hard market, at least from a pricing perspective,” Autonomous said.
Meanwhile, terms and conditions remain a key area of tension, as per Autonomous.
Brokers expect reinsurers to be prepared to “add frequency back to coverages”, but reinsurers have broadly retained the improved terms secured during the hard market and appear “willing to sacrifice much more on pricing rather than seeing slippage in contract terms and structures”.
Alternative capital is another focus, with Aon estimating sidecar vehicles at around $23 billion at mid-year, up about 50% since the end of 2024, although Autonomous estimates casualty-focused vehicles account for little more than $2 billion.
Ceded reinsurance “ReShare” vehicles are also attracting growing investor interest, despite reinsurance rates falling significantly, something Autonomous describes as “a little counter-intuitive”, given new capital was broadly absent during the tighter 2023-24 market.
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