The January 1 reinsurance renewal season is running later than anticipated, characterised by a delay in Firm order term (FOT) issuance and very few contract signings to date, according to a new report from KBW analysts following their semi-annual Bermuda visit.
Despite the sluggish pace, analysts describe the market as “orderly,” with the delays appearing to tip the scales in favour of reinsurance buyers.
“Executives suggested an array of causes for late renewals, ranging from a late Thanksgiving to typical early mover Scor moving more slowly to last December’s later buyers generally getting better deals. We think the delays generally favour reinsurance buyers, since widely perceived 2026E rate adequacy will probably lead reinsurers to give up another point or two to meet premium budgets,” analysts said.
Adding: “Reinsurance broker strategies vary somewhat; some are urging clients to avoid the risk of a large late-December loss, but unless that happens, we expect waiting to remain prevalent and – ultimately – effective.”
While data points remain limited due to the late timeline, the broad consensus from Bermuda executives according to KBW, is that risk-adjusted property catastrophe reinsurance rates are softening more than previously forecast.
Earlier expectations during Q3 2025 conference calls pinned rate decreases in the 10% range. However, KBW analysts note that expectations have now worsened to the “upper teens,” with significant pressure on remote layers that remain loss-free through 2025.
“In general, reinsurance brokers’ guidance (which we think is more credible, especially amidst overall softening) was of rate decreases of 15-20% versus the reinsurers’ more common 10-15% range,” analysts stated.
Despite the projected mid- to high-teens rate decreases, 2026 is still projected to be a strong year for reinsurers. Several executives described 2026 as the “fifth-best” year in the catastrophe reinsurance industry’s history.
This optimism is supported by per-occurrence attachment points which, following the stark increases of 2023, have remained broadly unchanged in nominal terms.
Regarding terms and conditions (T&C), the market is seeing a loosening on the margin, as described by KB!, though changes are not considered drastic.
Key shifts include: a) expansion of covered perils beyond peak perils; b) expansion to worldwide coverage; c) longer hours clauses; and d) coverage of strikes, riots, and civil commotion (SRCC) following major weather events.
“Relatedly, continuing the theme from our May discussions, several brokers noted that a few more aggregate covers are being written, albeit selectively and focused on protecting cedants against multi-peril events, contrasting with the pre-2023 aggregates that largely (and cheaply) protected earnings,” KBW added.
The report highlights a consensus that Florida’s legislative reforms – targeting assignment of benefits and one-way attorney fees – are successfully reducing claim frequency and severity.
However, large national insurers are not expected to re-enter the Florida homeowners market imminently; carriers are reportedly waiting for a longer track record to ensure the reforms are durable and will not be rolled back.
In the Casualty and Specialty space, executives anticipate little inflection. Coverage remains predominantly proportional, meaning primary rate changes (ranging from double-digit casualty increases to flat workers’ comp) will flow through to reinsurers.
A notable trend in negotiation strategy involves cedants and brokers bundling troubled casualty business – specifically commercial auto and excess casualty – with highly valued property business. KBW notes this dynamic favours multi-line reinsurers over pure-play property catastrophe specialists.
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