While lower catastrophe claims in the second quarter of 2026 are a net benefit to reinsurer profitability, they are unlikely to prevent lower reinsurance prices, JPMorgan said. In fact, the bank expects pricing pressures to intensify, particularly due to El Niño, which predicts a weaker-than-average Atlantic hurricane season this year.
JP Morgan said in a new report that catastrophe losses in the second quarter of 2026 should remain below the historical average of $20 billion for the fifth consecutive quarter.
“Based on our bottom-up assessment of major catastrophic events this quarter, we estimate potential insured losses of approximately $15 billion, with severe convective storms (SCS) in the United States accounting for the majority of total losses,” the company explained.
It was reported that more than 90% of insured losses in the second quarter of 2026 were caused by SCS, and JPMorgan noted that SCS has been a major contributor to total insured losses in recent years.
SCS-related losses are expected to be approximately $64 billion in 2023, more than $50 billion in 2024, and approximately $49 billion in 2025.
Gallagher Re estimates the cost of insured losses from U.S. SCS to be approximately $22 billion so far in 2026.
This is below the five-year average ($38 billion) and the ten-year average ($30 billion), but it still brings U.S. SCS insured losses in 2026 to more than $20 billion for the eleventh consecutive year.
In addition to SCS in the United States, SCS losses in Europe are expected to cost insurers hundreds of millions of dollars, according to Aon.
JPMorgan noted that the second quarter of 2026 has not seen any significant losses that it considers reinsurance events.
“Falling catastrophe claims, while good for reinsurer profitability, can also be bad news as they do not contribute to lower prices and could lead to greater pricing pressure,” the company said in the report.
JPMorgan continued: “Overall, the first half of 2026 should be very profitable for reinsurers. Therefore, with companies likely to be well on track to meet their profit targets for the year, we expect reinsurers to look to ‘manage’ earnings in the second half of 2026 through increased reserve buffers and other areas that can enhance prudence.”
“Price reductions in reinsurance pricing are accelerating rapidly in 2026, with renewal prices down 12% in January, falling to 16% at mid-year renewals, according to Guy Carpenter.
“Prices tend to follow loss experience; therefore, smaller catastrophic losses in 2026 are unlikely to help stem market price declines.
“The 2026 Atlantic hurricane season is expected to be less intense than average due to El Niño. Therefore, while profits are expected to be strong in 2026, we believe there is little indication at this stage of a bottom in near-term pricing.”
