A new report from JP Morgan has suggested reinsurers are better prepared than ever for a softening market, though price declines are expected to catch up with the sector eventually, particularly as Q1 2026 is likely to deliver far lower-than-normal catastrophe losses.
JP Morgan anticipates total insured losses from natural catastrophes to be around $10 billion in Q1 2026, well below the historical normal range of $~15 billion and meaningfully lower than the $~45 billion in Q1 2025.
The largest events during Q1 2026 were reportedly Winter Storm Fern in the US in January and Storm Nils in France in February.
Commenting on Winter Storm Fern, JP Morgan said, “The storm caused damage via freezing temperatures, heavy snow and freezing rain across parts of the US.
“While a costly event in total, we assume that Winter Storm Fern is likely not a particularly large event for the reinsurance industry with our expectation that a lot of the loss burden will fall to primary insurers instead.”
Meanwhile, according to JP Morgan’s report, the war in the Middle East has not created many insured losses at this stage.
“War exclusions in insurance are well tested and as a result we do not expect to see material levels of exposure at this stage. We assume that natural catastrophe budgets for Q1 2026 are likely to be ~50% utilised for the reinsurers with far better experience than Q1 2025, which was impacted by the LA wildfires,” the firm added.
JP Morgan also highlighted how reinsurance pricing has been declining in 2026 at a relatively rapid pace in property catastrophe lines, following three excellent years for returns for reinsurers 2023-25.
“Light catastrophe claims are good for the reported results of the reinsurers but will not help to stem the price declines in the market,” the firm explained.
JP Morgan continued, “We do see the reinsurers being better prepared for a softening market than ever before, but at some stage price declines will catch up with the industry. We would expect at this stage of the year that the reinsurers in some cases will look to add the nat cat ‘good luck’ into reserving by making more conservative assumptions.
“At the recent April renewals, we saw a continuation of price declines in property catastrophe lines with mid-teens reductions seen in the Japanese business. US rate declines also continued to accelerate, based on data from Guy Carpenter, with US property catastrophe pricing down -14% vs -12% at the 1 January renewals. Looking ahead to the mid-year renewals that are more focused on US business, we would expect similar trends to continue.”
