Reinsurance broker Gallagher Re shared its expert commentary on U.S. real estate lines at renewal on January 1, 2026, highlighting “real estate cat pricing declines that were larger than average expectations.”
As the end of the year approaches, a surge in available capacity and a relatively quiet Atlantic hurricane season have led to lower prices, according to Gallagher Re’s First View: Choices and Opportunities report.
“Although renewal completions were generally later than in previous years, global real estate markets were buoyant on January 1, 2026, as clients benefited from continued healthy market conditions supporting adequate and responsive capacity supply,” commented Keith Lippman, Global Head of Real Estate.
For property cats, the report states that reinsurers are targeting modest pricing reductions at the quote stage, with general targets ranging from flat to a 10% reduction.
Analysts noted that it was clear early on that capacity was sufficient, with reinsurers indicating potential growth ranging from 10% to more than 50% during the quoting process.
Some cedants purchased more limits at the top or bottom of their plans, but overall, payouts are expected to fall by 5% to 10% overall.
According to Gallagher Re, loss-free Cat XoL program renewal rates are down 10% to 20% on a risk-adjusted basis. For projects affected by losses, primarily last January’s wildfires and local severe convective storm events, loss rates were generally flat or down 10%.
Lippmann commented: “The devastating and tragic California wildfires are off to a difficult start for the global reinsurance industry, given the relative concentration of losses in a small number of underwriters and the high reinsurance utilization rates among those underwriters.
“While the remainder of the year will have a modest impact on peak risk losses, secondary risks are once again a driver of global insured catastrophe losses, with total insured losses expected to exceed $120 billion.”
Pricing aside, the January 1 renewal marks a “bounce back” to a well-structured overall plan. Major disaster markets have shown a new willingness to fully support customers, easing the capacity constraints of previous years.
“While buyers’ focus is mainly on price, there is also an incentive to clean up non-concurrencies that still exist from the previous year’s renewals,” the analysts added.
states: “Differentiation is common as reinsurers apply changing risk metrics to individual cedants; changes in underwriting guidance, key pricing trends, deductible adjustments, loss performance and other metrics are key factors in individual results.”
For property risk, the report notes that excess capacity in the market is generally good for performance, “but renewal outcomes are more nuanced. Quotations have generally been close to flat, but as with catastrophe placements, reinsurers have shown flexibility in the final outcome.”
Renewal outcomes depend primarily on personal experience and the characteristics of each account. Average prices for projects without losses fell by 5% to 10%, while prices for projects that suffered losses stayed the same or increased by up to 5%, but the results varied widely.
For pro-rata business, the report found that while reinsurers’ profit margins have declined, capacity for pro-rata placements remains adequate.
Reinsurance commissions have been improving in the range of -1.5% to 0%, indicating a more favorable assessment of risk and lower pricing for any catastrophe insurance included in reinsurance treaties.
Analysts concluded: “The timing of firm orders was late as customers expected and experienced softening in pricing as renewals progressed. Terms and conditions and wording subjectivity have improved, with many reinsurers agreeing to more standardized terms.
“Many reinsurers are open to reviewing new carriers and opportunities, while some continue to focus on business and add capacity to existing carrier clients.”
