Rachel Turk, head of market performance at Lloyd’s of London, classifies the current reinsurance market as one that is softening but not weak, noting that it is on a knife’s edge and could reverse after a major loss event.
Speaking at Fitch Ratings’ 2026 Insurance Insights event in London on January 22, Turk stressed that it was not inevitable that the industry would enter a completely softer market.
Although reinsurance renewal prices have softened recently in January 2026, she said a major cyber disaster, natural disaster or other significant loss could quickly change market conditions again.
“From an insurance perspective, we’re having a very, very mild North Atlantic hurricane season,” Turk explained. “It’s the same as normal in terms of the number of storms, but they just don’t happen to make landfall. So, it’s a very, very mild North Atlantic hurricane season. If it’s a severe season, those rates are going to go up and we’re going to be back to a hardened market period. So, that’s why I say it’s on the knife edge.”
“I think returns on capital are partly driven by the fact that we’re entering a completely soft market.”
This is a valid point as reports from brokers and ratings agencies indicate that the reinsurance industry will meet its capital costs for the third consecutive year in 2025, although the outlook for 2026 is less certain, although real estate catastrophe rates are still considered adequate as they have retreated from high levels.
Turk noted that while pricing has begun to soften, terms and conditions and add-on points in the reinsurance market remain constrained.
“At 1.1, we saw a softening in pricing, but from a reinsurance perspective, we haven’t seen a softening in terms and conditions or tie-in points. I’ll get nervous when terms and conditions and tie-in points start to be threatened. At the moment, I’m not worried about pricing because there’s plenty of pricing,” she said.