Insurance and reinsurance executives speaking at a recent industry conference said there were few surprises during midyear 2026 reinsurance renewals—with past overreactions on price hikes explaining this year’s declines.
“The question that’s going to be super relevant is: Where are we a year from now?” asked Jim Williamson, president and chief executive officer of insurer and reinsurer Everest Group Ltd., during the S&P Global Ratings 42nd Annual Insurance Conference earlier this month.
“Do we see, which I’m hopeful we will, a discipline that creates a bit of a floor?” Williamson asked, going one step beyond answering a question about the adequacy of property reinsurance pricing posed by Taoufik Gharib, director and lead analyst for S&P Global Ratings, during an “Executive Perspectives” session of the S&P conference.
Williamson prefaced his question about what happens in 2027 by first confirming that property pricing in the reinsurance industry and the underlying primary industry has been heading down this year. “That’s definitely occurring,” he said. Offering the “very simple” reason, Everest’s leader recounted the need for both the primary and reinsurance sectors to meaningfully correct rates upward a few years ago. “Losses had exceeded available capacity, and you saw a correction. …”
“In retrospect, that was a bit of an overcorrection, and you had some really strong profitability in property, both primary and reinsurance, which obviously we love as a seller of both those products. But at the end of the day, it’s a competitive market. [There] are lots of market participants who see that excess profitability and they want to lean into it.”
He noted that Gharib’s question focused on rate change, which is easy to measure and often reported by brokers. “The question is if you’ve overcorrected and now [rates are] coming down, where are you relative to what price you need to charge to earn a reasonable return? Define that as you will—15% ROE or whatever.”
Right now, Williamson said, “We’re still in a really good spot,” giving his take on the now-settled June 1 renewals for Florida windstorm reinsurance contracts. “It’s what everybody expected. Rates traded down mid-teens. Largely terms and conditions held.”
Young agreed that the focus should not be on rate changes but instead on rate adequacy. From his vantage point, Young reported that the steepest property price declines are occurring in the commercial insurance market, specifically in the shared-and-layered market in the U.S. “The U.S. results in property have been fantastic. Those have been carrying the industry results, which have been excellent, but it’s mainly been as a result of property as compared to other lines,” he stated.
“When you look at price adequacy, notwithstanding the significant reductions we’ve seen in the U.S., it’s still the best-priced market from a reinsurance property-cat perspective. It’s just not about price. It’s about structure, it’s about retention levels that continue to [be] maintained at what we think is a decent level,” Young reported.
Fairfax’s leader did note one market surprise this year outside the U.S.—in Japan, where he reported the “weakest pricing today.” According to Young, Japanese cat pricing saw significant reductions this year—more than he anticipated given major typhoon activity in 2018 and 2019.
