New research from Autonomous suggests there is reason to be optimistic that the current reinsurance cycle is “somewhat more rational” than previous reinsurance cycles, although terms and conditions will come under increasing pressure as 2026 progresses.
Autonomous explains in a new report that reinsurance cycles are often determined by simple supply and demand dynamics, which often trigger rapid price increases followed by price declines following major catastrophic events.
The last cycle was markedly different, however, with pricing momentum starting in 2018 renewals following a highly active hurricane season in 2017 and steadily building strength until peaking in 2023-24.
Autonomous added that while there is still reason for optimism that the current cycle is slightly more rational, a year of limited losses in the reinsurance sector has allowed the industry to significantly increase capacity.
“With the major insurance sectors also facing pricing pressures, particularly across much of the global commercial market, there is an increased focus on reinsurance spend as a profit maintenance tool,” the company said.
Autonomous continued: “It is worth noting that after two years of weakness, market conditions now appear to bear some similarities to the previous soft cycle in 2014.
“Global catastrophe pricing is down mid- to high-single digits at renewal in January 2025, which is better than what we have seen previously at the start of a soft cycle.
“Fast forward a year and the industry is catching up to historical norms. By comparison, January of this year shows a better picture than January 2025, showing the largest price declines in the second year of market weakness, although conditions now are broadly consistent with market pricing dynamics from the 2014 and 2007 cycles.”
On terms and conditions, Autonomous highlighted talk of slippage throughout 2025 and reinstated several high-profile general contracts.
Autonomous concluded: “Broker comments again appear to be consistent, noting that reinsurers have been more forcefully defending terms and conditions, while cedants have generally been content with price savings.
“While this is largely anecdotal at this time, we will follow developments as best we can throughout the year.
“We do note that brokers are collectively warning that terms and conditions will come under greater pressure as 2026 progresses, with reinsurance pricing now at more balanced levels and brokers and cedants likely to demand greater underwriting of earnings swings.”