The latest 1st View report from reinsurance broker Gallagher Re shows that risk-adjusted real estate catastrophe pricing has fallen by an average of 10% to 20% since reinsurance renewals on January 1, 2026, with many buyers focusing on “lowering pricing” rather than “increasing risk.”
The report highlights the greater availability of reinsurance capacity, which creates more choice, variation and opportunity for buyers during the critical 1.1 renewal season.
Gallagher Re said many cedants are prioritizing price cuts, although in some cases some buyers have achieved a “rational trade-off” between price and expanded coverage to reduce volatility, a trend Gallagher Re expects to accelerate in 2026.
Ultimately, protected buyers approached disaster renewals with different goals, while sellers were more accommodating than previous renewals.
Although risk-adjusted catastrophe rates fell more than expected, the broker said market returns are still largely considered adequate.
Gallagher Re said: “Global real estate markets are vibrant in 1.1 as customers benefit from continued healthy market conditions, supporting adequate and responsive capacity supply.”
In the casualty sector, key discussion points for 2026 1.1 remain concerns about the US litigation landscape, previous year’s loss developments and rising losses trends. Competition among international casualty insurance sellers was fierce on January 1, while demand continued to grow as reinsurers sought growth and diversification. All this has led to an upward trend in commissions, with rates falling by 5% to 10%.
In the specialty market, Gallagher Re highlighted a continued oversupply of capital and a significant increase in demand across all specialty product lines at renewal time.
Tom Wakefield, global chief executive of Gallagher Re, said: “The January 1, 2026 renewal represents further price reductions and structural flexibility. Technology pricing, geography, loss history and business scope will all influence the extent of planned changes.
“Our priority in the coming year will be to work with clients on reinsurance buying strategies, given the availability of capacity across our business lines. There are many options and opportunities to improve reinsurance coverage, and we intend to explore all of them.”
The broker’s latest First View report also discusses reinsurer capital, showing that dedicated capital is expected to hit an all-time high by the end of 2025, with traditional capital growing about 8% to $710 billion and alternative capital growing 12% to $128 billion, taking total capital for the industry to $838 billion.
Additionally, the report found that the reinsurance industry’s profitability should remain sustained, with overall return on equity (ROE) of around 17-18% in 2025, according to Gallagher Re, which is at least the same as 2024 and likely to be the second-best ROE of the past decade.
The report also discusses the impressive growth of the insurance-linked securities (ILS) market, with catastrophe bond issuance exceeding $20 billion for the first time in a year.
“During the renewal process, the quality of reinsurer relationships and consistency of terms are paramount considerations, with cedents able to reflect on recent tough market negotiations and consistent service standards, including claims payment performance. Synchronization of price and coverage is achievable and is a priority,” said Gallagher Re.