Property catastrophe reinsurance rates are expected to continue to soften in 2027, absent a large-scale hurricane or other loss event(s) in the second half of 2026, according to a recent Fitch Ratings report.
Following substantial rate reductions in January 2026, property catastrophe pricing experienced further significant softening during the mid-year 2026 reinsurance renewals.
Pricing for lower layers remained flat or decreased by single digits. More remote, higher layers that were loss-free had the most capacity, from both traditional insurers and alternative capital providers, resulting in the largest rate declines at double-digit levels.
Additionally, loss-affected business also saw moderate price softening during the June and July 2026 renewal period.
According to Fitch, terms and conditions in the property catastrophe market are also likely to loosen further in 2027, with higher limits, broader event definitions, extended hours clauses and expanded aggregate covers.
Driven by heightened competition among reinsurers, terms and conditions already weakened at the mid-year 2026 renewals. Although higher attachment points and retentions generally held, the availability of aggregate treaties and frequency event covers increased, particularly from the capital markets, offering earnings volatility protection to select cedents.
Furthermore, reinsurers were also willing to participate lower down on programs where cedent demand is high.
For the US property market, pricing for risk and catastrophe loss-free business declined by up to 25% at the mid-year 2026 reinsurance renewals, compared with a 20% decline in January 2026. US catastrophe loss-hit business also experienced rate declines of up to 5% at the recent renewals.
Florida property also fell up to 25% as strong supply was more than adequate to meet higher demand. After three strong underwriting years, including zero US hurricane landfalls in 2025, insurers used added capital to buy extra limits, lower attaching layers, reinstatement protection, and new drop and top and aggregate covers from collateralised reinsurers.
The addition of several new Florida startup insurers and increased depopulation from Citizens Property Insurance Corporation also drove demand in the state. Takeout companies tend to buy more private reinsurance than Citizens.
Global reinsurer Hannover Re shares Fitch’s expectations, highlighting that although rates will continue to soften, there is expected to be a deceleration of rate cuts heading into January 1, 2027 renewals.
Sven Althoff, Member of the Executive Board for Property & Casualty, recently commented: “Everywhere else, we would say, well, the softening did not start as early as on the property cat side. It’s significantly lower compared to what we have experienced on the property cat side.
“So, therefore, there’s no change in sight, and at the end of the day, it all depends on the loss experience of the client. If that is very positive, reinsurers will be minded to take that into account. If there have been losses, then even today we also see increases. So, therefore, there’s less of a general trend outside property cat.”
