Rachel Turk, Chief of Market Performance at Lloyd’s of London, classifies the current reinsurance market as one that is softening, but not soft, noting that it is on a knife edge and could reverse following a major loss event.
Speaking at Fitch Ratings’ Insurance Insights 2026 event on 22nd January in London, Turk emphasised that it is not inevitable that the industry will move into a completely soft market.
Although prices softened at the recent January 2026 reinsurance renewals, she said that a major cyber catastrophe, natural catastrophe, or other significant loss could quickly shift market conditions again.
Turk explained, “We had a very, very light, North Atlantic hurricane season from an insured perspective. In terms of the number of storms, it was the same number that there are normally, but they just didn’t happen to make landfall. Therefore, it was a very light insured North Atlantic hurricane season. Had it been a heavy season, those rates would be going up and we’d be back into a period of hardening market. So, that’s why I say it’s on a knife edge.
“I think the return on capital is partly what’s driving the fact that it is not inevitable that we move into a completely soft market.”
It’s a valid point, as reports from brokers and rating agencies suggests that the reinsurance industry will meet its cost of capital for a third consecutive year in 2025, although the outlook for 2026 is less certain, despite property cat rates still being viewed as adequate as they’ve softened from a high level.
Turk noted that while pricing has begun to soften, the reinsurance market has remained disciplined in its terms and conditions and attachment points.
“At 1.1, we saw softening of pricing, but from a reinsurance perspective, we have not yet seen softening of terms and conditions or attachment points. I get nervous when terms and conditions and attachment points start to come under threat. At the moment, I’m not worried about pricing, because there’s a lot of price adequacy,” she said.
