The property catastrophe reinsurance market in Australia and New Zealand continued to soften at the “relatively late” 1 July renewals, according to Gallagher Re’s First View, A Moment for Creativity – July 2026 Renewal Report.
Gallagher Re, the reinsurance broking and advisory business of Arthur J. Gallagher, says abundant capacity, subdued demand and increased competition among reinsurers drove further rate reductions, with even loss-affected catastrophe business generally renewing at rates that were flat at best or up to 5% lower, on a risk-adjusted basis.
The reinsurance broker reports that loss-free risk layers in the region recorded rate reductions of 5% to 15%, while loss-free catastrophe layers saw larger decreases of 12.5% to 17.5%.
Gallagher Re notes that the renewal season progressed later than usual, with a number of cedents only releasing key information to reinsurers in June. This contributed to a more segmented placement approach, particularly where loss-affected lower layers were negotiated separately from cleaner middle and upper layers. Gallagher Re says cedents adopted this strategy to maximise savings across the majority of their programmes while addressing more challenging layers independently.
The report highlights that reinsurers broadly recognised the effect of higher retentions established during the hard market, which have largely confined the October and November storm losses in south-east Queensland to first layers, despite the November event developing beyond early estimates.
According to the broker, renewal discussions focused primarily on pricing, with only limited structural or wording improvements sought by cedents. The report adds that most remaining differences in contractual terms from previous renewals have now largely been eliminated.
Gallagher Re also notes that a number of Asian and London-based reinsurers that had previously reduced or withdrawn capacity from Australia and New Zealand returned to the market with flexible offerings in an effort to gain new shares. This added to already plentiful capacity, while demand was reduced by insurer consolidation and the introduction of the Cyclone Pool.
The report states that incumbent reinsurers generally sought to preserve or increase their existing shares, creating competitive negotiations around capacity allocation. Additional capacity also filtered into aggregate and structured solutions, although uptake remained selective because of cost considerations.
For per risk programmes, Gallagher Re says the imbalance between supply and demand continued to place downward pressure on pricing as reinsurers looked beyond property catastrophe business to deploy excess capacity. Overall, Gallagher Re characterises the Australia and New Zealand renewal as a market where plentiful capacity and disciplined cedent strategies continued to support softer pricing across most property programmes.
