Briefing: Overarching soft reinsurance market at 1/1 sets out insurer opportunities for 2026

Although most professionals across the insurance market were able to put their feet up with a festive sigh in 2025’s Twixmas, those involved in the reinsurance industry had a heavier to-do list as the annual 1/1 reinsurance renewal date loomed and individuals sought to ensure that no preparatory stone was left unturned.

With 2026 now firmly established and most market participants back at their desks, there certainly appears to be pricing positivity for primary insurers, with post-renewal data depicting a widely soft and well capitalised reinsurance market.

For example, both Gallagher Re and Aon identified “record breaking” levels of capital underpinning this marketplace, with Gallagher Re’s 1^st View report – published on 2 January 2026 – projecting a traditional capital base of $710bn (£526bn) for the reinsurance sector this year, an uptick of around 8% on 2025.

Similarly, Aon recorded global reinsurer capital at $760bn (£563bn) as at 30 September 2025 in its Reinsurance Market Dynamics: January 2026 Renewal report, published on 5 January 2026. The broker noted that this was a $45bn (£33bn) year-on-year increase.

In terms of alternative capital, such as catastrophe bonds or insurance-linked securities (ILS), Gallagher Re forecast 12% growth on 2025, estimating that alternative capital for reinsurance purposes will amount to $128bn (£95bn) heading into 2026.

The broker additionally confirmed that alternative capital in reinsurance has doubled over the last 12 months, hugely supporting softer conditions and capacity availability at 1/1 – ILS issuance, for example, passed the $20bn (£15bn) milestone in 2025.

Added up, Gallagher Re put total reinsurance capital at $838bn (£621bn) for 2026. Not an insignificant amount.

Paired with this overall capital influx, reinsurers have further benefited from fewer large catastrophe losses hitting their books, helping them to retain profitability and reduce the need to support an onslaught of claims.

Gallagher Re noted: “These were approximately 10% less than the 10-year average and more concentrated in non-peak perils.”

Aon agreed that “a benign hurricane season created competitive tension in the marketplace”.

What does this landscape mean for UKGI insurers?

Less large scale losses and additional capital flows put reinsurers in a very good place for 1/1 – a factor that has influenced soft market conditions and pricing for primary carriers looking to secure cover.

For example, Howden’s Re-balancing report – published on 2 January 2026 – stated: “Most areas of the market recorded price decreases at [the] 1 January 2026 reinsurance renewals, bringing pricing back to levels last seen around four years ago – albeit with comparatively higher attachments and tighter terms.

“Buyers benefited from ample supply and intense competition, creating opportunities for cedents to secure broader coverage at discounted pricing.”

Providing a more granular example of the price decreases it had seen as a result of softening conditions, Howden shared that “the UK recorded the largest rate reductions” on a country basis for global property catastrophe reinsurance, with rates falling by 15% to 20% at 1/1.

With reinsurance prices boasting extreme competitiveness, this could give UKGI insurers pause for thought with regards to their strategic planning for 2026, potentially accelerating certain agenda items or encouraging broader thinking.

Gallagher Re summed this up well, discussing a kind of see-saw between “down pricing” and “up risking” in its aforementioned report – this refers to primary insurers either looking to cash in on lower premium prices to buy supplementary or additional coverage in existing lines, or opting to take advantage of competitive pricing to branch out into new areas or take on additional risks.

It explained: “While many buyers focused on down pricing [at 1/1] rather than up risking, there were exceptions, with some cedants electing to seek – and achieve – a rational trade-off between price and enhanced coverage, notably in buying down to reduce volatility they never elected to reassume. Gallagher Re expects that trend to accelerate during the year.”

Howden concurred with this analysis: “With core programmes placed for less spend than anticipated at 1 January 2026 and with strong signings, some cedents purchased supplementary coverage to manage retentions and reduce volatility. Others plan to deploy their savings to purchase additional protection in the first six months of 2026.

“This backdrop brings opportunities across the value chain. Buyers are benefiting from rate reductions and improved terms as supply exceeds demand in most areas, [while] underwriting performance remains strong, delivering healthy profits and returns on capital.

“Buyers are well positioned to secure additional protection in a period of elevated risk, heightened shock potential and favourable market conditions. For carriers, [this] transition rewards underwriting excellence [while] incentivising innovation to unlock new risk pools and generate incremental premium volume.”

Expanding risk appetite

If insurers are looking at tapping into reduced reinsurance rates to support entry into new risk pools, what key areas are proving to be of interest?

Aon ringfenced data centres as a potentially lucrative opportunity here, highlighting that “the estimated $5tn (£3.7tn) to $10tn (£7.4bn) of investment in data centres by 2030 will require significant insurance capacity, with the potential to generate cumulative premiums exceeding $100bn (£74bn)” over the next four years.

The broker further suggested that liability insurance could be a go-to area for insurer expansion, thanks to the “evolving regulatory and litigation landscapes”. Separate September 2025 figures published by Aon estimated that emerging risks in the casualty sector could contribute around $5bn (£3.7bn) to annual overall reinsurance premium.

Whichever way you look at it, there is a lot to play for in 2026. The 1/1 reinsurance renewals have set the stage for a very opportunistic start to the year.

In the same way that brokers and end clients are tapping into UK general insurance (UKGI) soft conditions to secure greater coverage for the same price, or repurpose spend to take out additional policies in lesser considered lines – such as cyber – the primary insurer market now seemingly has a similar opportunity to do more while paying less.

David Howden, chief executive at Howden, summed up the 1/1 vibe well: “This is a rare moment where everyone stands to benefit.

“We’re in the midst of a softening market where prices are falling despite elevated political and economic volatility. By doing more to harness data, anticipate future risks and innovate to respond to the needs of clients, reinsurers can stay ahead of the curve and continue to be profitable.

“This will mean that clients will have even greater choice to better protect themselves from unexpected shocks – whether political, cyber related, litigation driven or property-based.

“So, 2026 will be a year of enormous possibilities. It’s up to both businesses and reinsurers to take advantage.”

Will 2026’s first half be one defined by underwriting innovation driven by competitive reinsurance? The ball is clearly in insurers’ courts.

• Insurance Times has converted dollar amounts into pounds using an exchange rate of $1.35 = £1, which was correct as of January 2026.