Amwins, an independent wholesale distributor of specialist insurance products active in the global reinsurance market, provides an updated perspective on conditions in the year ahead.
The assessment draws on comments from Jennifer Keefe, vice president of marketing at Amwins Re, and insights from Nigel Fearon and Tom Jakob, directors at Amwins Global Risks.
Amwins said the reinsurance market is gradually stabilizing after several years of steep fee cuts of 30% to 40%. Barring a major global loss event this year, any further weakness is now expected to be more modest, likely in the 10% to 15% range.
The availability of capital from traditional and alternative sources enables reinsurers to offer greater participation and more adaptable structures, particularly in the upper echelons where catastrophe exposure is limited, which helps simplify broker and cedant placements.
The company noted that while reinsurers continue to be cautious about exposures involving severe storms, wildfire activity and flood risk, underwriting conditions have become less restrictive. Optional deductibles for wildfire and flood damage remain common, and valuation practices are coming under greater scrutiny.
The market is increasingly focusing on how replacement cost and actual cash value are applied to the various components of an insured property. Outside the property sector, reinsurers continue to take a cautious stance on risks that often generate losses, with Amwins stressing the importance of clear data and strong documentation when seeking favorable terms.
Competition has intensified due to the emergence of new entrants, including MGAs and frontier operators with lower capital expenditures. Insureds and brokers now hold greater leverage than in earlier hard market periods, Avins observed.
In areas where recognized insurers have reduced coverage due to recurring severe events, E&S carriers and reinsurance-backed institutions are moving forward to take on more business. This underscores the continued relevance of treaties and interim solutions as tools to maintain stability and support growth.
Regulatory developments have not yet resulted in significant changes to reinsurance structures, although Avins noted that reinsurers are closely monitoring updated solvency and capital requirements.
In the United States, social inflation and litigation funding continue to impact underlying carriers, but these pressures have yet to prompt substantial changes in reinsurance design. Economic factors such as rising labor and material costs continue to impact the severity of claims, and Avins acknowledged that any weakening in investment results could prompt reinsurers to reassess pricing or capacity decisions.
There is growing awareness of emerging risks, particularly in cyber, terrorism and climate-related areas. Amwins reports that demand for cyber and terrorism coverage is growing in both mature and developing markets. Flooding remains a major problem as changing weather patterns alter historical expectations. Increasingly frequent severe storm and wildfire events are impacting portfolio strategies and prompting reinsurers to refine their modeling techniques and diversify their approaches.
Avins stresses the importance of developing a thoughtful and smart strategy before renewing a contract. Thoughtful restructuring, careful floor planning and a clear understanding of which markets are deploying net capacity (versus treaty capacity) can improve pricing and efficiency. Complete documentation and coordinated communication remain critical when presenting risks, especially those that are engineering or data-intensive.
Amwins reports that the first half of 2025 will be more difficult than expected from a London market perspective. Rates fell faster than many London reinsurers expected, putting pressure on players who are typically slow to adjust.
The continued focus on higher margin direct business reduced available reinsurance capacity at the start of the year. Direct insurers in London and the US have also slashed rates to retain accounts, reducing the number of new vacancies.
Cementors often choose to retain smaller shares of the business rather than abandon them, thereby reducing temporary activity. As time went on, Unwins’ tone became more pragmatic. Direct insurers increasingly recognize the value of reinsurance support for retention and growth, and primary coverage is extended to higher limits.
This shift creates opportunities for reinsurers to support a broader layer of support and for cedents to apply “underwrite and buy” strategies to manage their net positions. With limited hurricane activity in the second half of the year, Amwins expects a more stable 2025 period in London’s dual-use space and a more balanced 2026 renewal period.
