David Flandro, head of industry analysis and strategic consulting at Howden Re, observed that a defining feature of June 1 renewals was the dichotomy between rising inflation, interest rates and risk premiums, and the direction of reinsurance pricing, with the soft pace in “increasingly stark” contrast to the broader economic and risk environment in which it was taking place.
Globally insured natural catastrophe losses have exceeded $100 billion each of the past four years, according to a new report from Howden Re, the reinsurance and strategic advisory arm of Howden.
The report also highlights a significant increase in geopolitical risks, with disruptions around the Strait of Hormuz earlier this year serving as a reminder of how quickly specialty and energy markets can shift.
At the same time, inflation is rising again, AI-driven cyber risks are rapidly expanding, and the adequacy of casualty reserves across U.S. lines of responsibility remains a hotly contested debate.
However, despite this, a new report from Howden Re suggests that reinsurance prices continue to fall and the gap between pricing and the underlying risk environment continues to widen.
“The defining feature of this update is the dichotomy between rising inflation, interest rates and risk premiums, and the direction of reinsurance pricing,” said Flandro, quoted above.
“Capital has never been more abundant in a higher-exposure environment. The last hard market began with an interest rate shock; today’s geopolitical landscape presents clear inflationary and asset-side risks that could undermine capital as quickly as it did three years ago.
“As an EVA contract, how much further pricing will fall before economic conditions reassert themselves will determine what happens on January 1, 2027.”
Overall, Howden Re said the June 1 renewal accelerated material improvements in the cedent’s outcomes in terms of pricing, capacity and structural flexibility.
“Markets enter hurricane season with ample capital, the worst on record for the catastrophe bond market, and an unusually broad range of options for cedants looking to optimize their plans,” the firm explained.
Howden Re continued: “As the macro picture evolves, cedants are leveraging the breadth of existing capabilities to build selectivity into their programs: broader coverage, more diverse panels and a more prudent balance between traditional and capital markets capabilities.
“In a world that is clearly riskier, the paradox of pricing weakness is to respond through structural preparations rather than complacency. This dynamic may determine how markets respond to the second half of 2026 and beyond.”