I’ve Been Watching the Renewals and something Doesn’t Add Up.

Six consecutive quarters of rate declines. Record reinsurance capital. And a market that’s quietly buying more protection, not less. Here’s what that tells me.

I spent the first weeks of 2026 doing what I do every January: watching the reinsurance renewals and talking to underwriters about what they’re seeing.

The headlines were predictable. Record capital. Softer pricing. Buyer-friendly conditions. Another good year ahead for clients.

But something in the detail caught my attention. Something that, if I’m right, changes how every corporate buyer and every board should be thinking about their insurance programme this year.

The Headline Story

Global commercial insurance rates fell 4% in Q4 2025 - the sixth consecutive quarter of declines after seven years of increases. Property rates are dropping by double digits in most major markets. Cyber is down globally. Marine hull is seeing flat to 5% reductions with improved terms. Financial and professional lines are softening everywhere except in pockets of US casualty, where social inflation and adverse litigation trends refuse to cooperate with the broader narrative. US casualty, as always, has not read the memo.

For corporate risk managers, this is the most favourable buying environment since 2017. No argument there.

But here’s the thing that isn’t in most market reports.

What I Noticed in the Renewals

Global reinsurer capital hit a record $760 billion by the end of Q3 2025 - up $45 billion in twelve months. Third-party capital reached $124 billion. The catastrophe bond market set an all-time issuance record: more than $24 billion placed across 74 sponsors, with roughly $59 billion in bonds outstanding. Reinsurers posted an annualised return on equity of 16% through the first nine months of 2025 - well above their cost of capital.

All of that capital had to go somewhere. And at the January 2026 treaty renewals, it did. Property catastrophe programmes achieved strong double-digit rate reductions. Retrocession pricing, the reinsurance that reinsurers buy for themselves, fell by mid-teens percentages. Casualty conditions improved. Capacity was described, by everyone I spoke to, as “more than adequate.” In my experience, when reinsurers start calling capacity “more than adequate,” what they actually mean is “we are fighting each other for every line.”

So far, so soft.

But here is what made me sit up. Despite all of this softening, insurers are expected to increase their property catastrophe reinsurance limits by approximately 5% in 2026. That follows a 6% increase in 2025.

The people who understand risk for a living, the insurers and reinsurers who price it, model it, and pay the claims, are buying more protection in a soft market, not less. That tells you something important about what they think is coming.

Why This Soft Market Is Different

Every cycle has a driver. During the 2014–2017 softening, the driver was structural: new ILS capital entering the market with a long-term thesis. That capital was patient. It stayed through losses. It persisted for years.

This time, the driver is different. Aon’s Joseph C. Peiser has described the current property market as a “pricing correction” rather than a structural shift. I think he’s right, and the distinction matters enormously.

This soft market is being fuelled by retained earnings from two consecutive years of exceptional profitability. No significant new capital has entered the traditional insurance and reinsurance markets. Carriers are deploying their own profits competitively because they need to maintain market share and satisfy growth expectations.

That kind of capital is performance-dependent. It exists because the last two years were profitable. The moment they aren’t; a major hurricane season, a systemic cyber event, an unexpected US casualty reserve deterioration, the capital contracts. And when reinsurance capital contracts, the primary market feels it within a quarter. Anyone who was broking in January 2023 will remember what that feels like. I’ve still not fully recovered from the phone calls.

Aon’s own analysis noted that insured losses in 2025 were already tracking 75% above the eight-year average, and described the operating environment as “fragile.” That word should give every buyer pause.

What Smart Buyers Are Doing Differently

The clients I’m most impressed by right now are not the ones celebrating lower premiums. They’re the ones treating this window as a strategic opportunity to rebuild their programmes from the ground up.

Here is what the best of them are doing:

Restructuring, not just renewing. Rethinking programme architecture. Reviewing retentions. Increasing limits where they’ve been artificially compressed during the hard market. Challenging whether their programme structure still reflects their actual risk profile.

Filling the gaps the hard market created. Broader exclusions, sub-limits, buyers accepted these compromises when they had no leverage. They have leverage now. The best buyers are using it.

Locking in multi-year capacity. Two- or three-year deals at current rates provide certainty and insulate against a sudden turn. In energy and marine, where programme continuity matters, this is particularly valuable. Markets are not uniformly agreeing it but its the time to ask.

Exploring lines they deferred. Parametric climate triggers, trade credit, political risk, supply chain BI - the appetite for emerging risks is broader today than it was eighteen months ago. The facultative market, in particular, is expanding rapidly and offering solutions that simply weren’t available at this price point during the hard cycle.

Treating reinsurance as a strategic asset. For buyers with captives or self-insured programmes, this is the window to restructure risk retention. Treaty pricing is at its most competitive since the pre-2022 correction. The range of products - from traditional excess-of-loss to structured transactions and loss portfolio transfers - has never been broader.

Using London for what it does best. Bespoke, manuscript solutions for risks that don’t fit standard products. In a soft market, the differentiation shifts from “can you get it placed?” to “can you get it placed intelligently?” Cross-border, multi-line, multi-capital-source structures are where the real value is being created right now.

The Counter-Intuitive Risk

Here is what I keep coming back to, and what I’ve been telling every client who will listen:

The biggest risk in a soft market is not overpaying. It is under-buying.

When rates fall, the instinct is to pocket the savings. But the clients who will be best positioned when the cycle turns - and it will turn - are those who used this window to buy more cover, not just cheaper cover. Increasing limits, broadening wordings, and closing structural gaps costs relatively little when $760 billion of reinsurance capital is looking for a home. Doing the same thing in eighteen months, after a loss event has reminded everyone what volatility actually looks like, could cost multiples more.

Or it could be impossible altogether.

 Six consecutive quarters of rate declines is a rare gift. But it has an expiry date that nobody can predict. The question for every risk manager and every board: are you using this window, or just watching it?

 I’d genuinely like to know: what are you seeing in your renewals this year? Are your clients reinvesting savings or banking them? And if anyone has found a way to make US casualty behave itself, please share — I’ll buy you a coffee. Or something stronger.