A new report from KBW analysts following a semi-annual visit to Bermuda shows that the January 1 reinsurance renewal season is later than expected and has been characterized by delays in firm order time (FOT) issuance and few contracts signed to date.
Despite the slow progress, analysts described the market as “orderly” and delays appeared to tip the balance in favor of reinsurance buyers.
“Executives cited a range of reasons for delaying renewals, from a late Thanksgiving to typical first-mover Scor moves being slower, to later December buyers typically getting better deals. We believe delays generally benefit reinsurance buyers as the general perception of adequate rates in 2026 could lead to reinsurers giving up a point or two to meet premium budgets,” the analysts said.
Adding: “Reinsurance broker strategies vary; some are urging clients to avoid the risk of large losses in late December, but unless this happens we expect waiting to continue to prevail and ultimately be effective.”
While data points remain limited due to the late schedule, there is broad consensus among Bermuda executives that risk-adjusted property catastrophe reinsurance rates have softened more than previously forecast, according to KBW.
Previous expectations during the Q3 2025 conference call were for rates to fall in the 10% range. However, KBW analysts noted that “mid-teens” expectations have now worsened, putting intense pressure on the remote layer to remain intact through 2025.
“Overall, reinsurance brokers’ guidance, which we view as more credible, especially amid overall weakness, is for rates to fall by 15-20% versus the more common 10-15% range for reinsurers,” the analysts said.
Although rates are expected to fall to the mid-to-high range, 2026 will still be a strong year for reinsurers. Several executives described 2026 as the “fifth best year” in the history of the catastrophe reinsurance industry.
This optimism is supported by per-occurrence attachment points, which remain largely unchanged in nominal terms after a sharp increase in 2023.
Regarding terms and conditions (T&C), as KB! describes, the market’s margins are loosening, although the changes are not considered drastic.
Key shifts include: a) Expansion of coverage beyond peak risks; b) Expansion to global coverage; c) Longer working hours provisions; d) Strikes, Riots and Civil Disorders (SRCC) coverage following major weather events.
KBW added: “Relevantly, and continuing the theme we discussed in May, several brokers noted that more blanket coverage is being written, albeit selectively, with a focus on protecting cedants from multiple hazard events, in contrast to blanket coverage until 2023, which largely (and cheaply) protects proceeds.”
The report highlights a consensus that Florida’s legislative reforms (targeting benefit distribution and one-way attorney’s fees) are successfully reducing claim frequency and severity.
However, large national insurance companies are not expected to immediately re-enter the Florida homeowner market; airlines are reportedly waiting for a longer track record to ensure the reforms are durable and cannot be reversed.
In the casualty and special areas, executives expect few changes. Coverage continues to change primarily on a pro-rata basis, meaning the major rate changes (from double-digit casualty increases to fixed workers’ comp) will flow to reinsurers.
A notable trend in negotiation strategies has been for cedants and brokers to bundle distressed casualty lines business (particularly commercial motor and excess casualty lines) with high-value real estate business. KBW notes that this dynamic favors multi-line reinsurers rather than pure property catastrophe specialists.
