Muted pricing and frozen terms signal stability for property reinsurance at 1/1

After years of upheaval, property reinsurers seem poised to embrace a steadier phase, with stability finally in focus. Yet beneath the surface, divergence remains.

Key points:
Inflation sets pricing floor
Profitability still fragile
But nuance replaces rate shock

Responses to Intelligent Insurer’s 2024 pre-renewals season survey point to a marketplace that has completed its reset, with sweeping changes to pricing and attachment points largely behind it. However, while most reinsurers expect rates to move only in line with inflation or stay flat, a notable minority is bracing for shifts in either direction.

Survey data shows reinsurers split between modest rises, inflation-linked adjustments and outright stability, though terms and attachment points are expected to remain largely unchanged. Property reinsurance is moving into a new phase, with respondents leaning towards outright softening, suggesting the market might finally be drifting back into competitive territory.

Regarding pricing within the property reinsurance, around a quarter of respondents (27%) forecast increases broadly in line with inflation and another 22% expected rates to remain stable. While 16% predicted moderate increases above inflation, 19% foresaw a moderate fall, with only a small minority (12%) anticipating significant rises well above inflation and even fewer foreseeing sharp decreases.

This distribution reflects a market in equilibrium, caught between inflationary pressures, catastrophe loss experience and the competitive instincts of capacity providers.

“The days of double-digit hikes across the board are behind us,” one participant wrote. “The market is increasingly rational. We’re watching inflation and loss costs closely, but this is not a market chasing extreme rate movement any more.”

A different comment embodied a more cautious stance. “Inflation may have set the floor, but it hasn’t solved the profitability challenge. Margins are fragile, and if we see another active cat season, rates could jump again. Anyone predicting a long plateau may be premature.”

The picture on terms and attachment points reinforces this sense of steadiness: 54% expected them to remain largely unchanged; 21% anticipated slight tightening. Only 8% saw significant tightening ahead and 16% a slight loosening in favour of cedants. Just one respondent predicted significant loosening.

So, it would seem the dramatic swings in attachment points in previous cycles are largely over. “The market has reset itself,” one participant noted. “We’ve come through years of repricing, rewording and tightening. What you see now is a foundation. Cedents and reinsurers alike know where the lines are drawn.”

Still, there are undercurrents of divergence: nearly 20% expect rates to fall, signalling pockets of the market could see competition reignite. Similarly, the 21% anticipating tighter terms reveal a cohort convinced discipline might harden further.

“It’s a split-screen market,” one participant wrote. “In certain territories and programmes, there’s pressure to ease. In others, particularly where loss experience has been tough, the talk is of holding the line or tightening still further.

“The averages don’t capture the real battles that will play out across renewal tables.”

For cedents, the message is mixed, but manageable. Stability in both pricing and terms provides a degree of predictability absent in recent years. But for reinsurers, the challenge remains: achieving profitability in an environment where inflation-adjusted increases might not fully offset cat losses or capital costs.

“We’re no longer living in a world where capacity shortages dictate the outcome,” one respondent commented. “It’s more nuanced now. Risk selection, structure and differentiation matter more than broad market moves. That’s the real story going into Monte Carlo.”

As the industry gathers, conversation might revolve less around rate shock and more around sustainability. The survey suggests reinsurers are prepared to settle into a disciplined middle ground, though with sufficient divergence in expectations to keep negotiations lively.

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