2025 reinsurance renewals experienced notable softening – Howden

The 1 January 2025 reinsurance renewals experienced notable softening overall, according to Howden.

The broker’s Past the Pricing Peak report, published yesterday (1 January 2025), said that favourable supply dynamics have become evident across both the commercial insurance and reinsurance markets over the last 12 months.

”These dynamics played a pivotal role in the 1 January 2025 reinsurance renewals, fostering competition that led to risk-adjusted rate reductions in several areas,” Howden said.

For example, global property-catastrophe risk-adjusted rates decreased by 8%, with US renewals achieving price drops of 7.5% to 15%.

Howden also explained that reinsurance demand was driven by volatile losses, rising exposures and model changes, while increased appetite from reinsurers and capital markets boosted supply.

And it felt the current market reflected reinsurers’ “ambitions for growth”.

Tim Ronda, chief executive at Howden Re, said: “Encouragingly, our clients are beginning to see relief from the pricing pressures of the last three years in several segments.

“Even with this relief, we believe that end risk takers can continue to generate strong returns and provide a stable and long-term source of efficient capital.”

Outlook

However, while pricing is beginning to decline, structural changes introduced during the hard market are likely to endure.

And Howden said insurers are expected to face continued earnings volatility in 2025, as they absorb the majority of catastrophe losses.

In turn, the broker felt that finding risk transfer propositions to sustain market growth and address protection gaps “will be critical as price momentum wanes”.

David Howden, founder and chief executive at Howden, said: ”The dawn of a new cycle presents fresh opportunity as insurers look for new business to drive growth.

”In a more volatile world, our clients are crying out for more protection in everything from cyber to renewables. So the stars are aligning. Greater emphasis on innovation, on collaboration and on listening to the needs of the customer will mean a win-win-win for clients, society and insurance companies alike.”