Casualty strength lifts market into rare pullback-free 1/1

Casualty is set to do the heavy lifting into the January 1 renewals, with record pricing and stable capacity making this the first season in years without a major pullback, according to senior Aon executives.

“Primary casualty and excess casualty pricing are at all-time highs.”

“Going into 1/1, there is continued positivity around the primary market, particularly in the US,” said Amanda Lyons, CEO of Aon Reinsurance Solutions Bermuda, at its renewal briefing in London. “Primary casualty and excess casualty pricing are at all-time highs, with excess casualty rates up over 143% cumulatively through the first half of 2025 since 2013.

“Pre-stock market in the second quarter, many of the casualty sub lines were achieving rates in excess of lost trend, and we’re projecting excess liability rates well into the double digits for the second half of the year, and very high single digits for general liability and auto. Workers compensation and D&O are still a touch negative, but D&O is stabilising and not anywhere near the price decrease as we saw a few years back.”

International markets are also improving, Lyons said, though reinsurers remain alert.

“Loss development in recent years has actually created widespread confidence in the segment,” she explained. “Original GL rate increases are plateauing on one hand, but the reductions on financial lines in the international market are starting to slow, much like we’re seeing in the US.”

Most importantly, she flagged reinsurers’ willingness to put capital to work.

“Given the optimism on the primary rating environment and the reactions that many of our carriers have taken on the claim side, most reinsurers are holding capacity consistent or looking to grow. And this would mark the first 1/1 in quite a few years where there’s not a major player announcing a pretty significant pullback. So very optimistic going into 1/1.”

On property, reinsurers are prepared to loosen, said Tracy Hatlestad, head of property, reinsurance at Aon. “We believe reinsurers will still be able to target ROEs on their property cat portfolios, while with rate reductions of 10% or more going into standard 1/1, supply remains ample, and there are early indications for continued desire for growth for reinsurance,” Hatlestad said. “This builds well for insurers, as we expect demand for property cat programmes to increase by about 5% again in 2026 driven primarily by growth in the US.”

The backdrop points to plentiful firepower. “We definitely see the reinsurance market as being very robust with plentiful capacity and record levels of capital surveying the industry,” said Alfonso Valera, international CEO for reinsurance. “This comes both from traditional and also alternative capitals. As you may know, 2025 is a record year for capital bond issuance, despite the fact that it hasn't ended.

“We anticipate and we believe the market will be very much a buyer’s market.”

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