Briefing: Winds of change blow in Monaco, but have reinsurers really gone soft?

As reinsurers gathered in the Mediterranean playground of Monaco to begin their discussions around the annual renewal of many of the world’s reinsurance programmes on 1 January, the impact on policyholders in the UK could be profound.

With the rise in the use of technology, the real work finalising details for reinsurance renewals has been pushed back to the final two months of the year.

The Rendezvous conference in Monte Carlo, however, has see the opening shots fired between reinsurance brokers and their underwriting counterparts.

For several years, the underwriters have had the upper hand. Natural catastrophe losses and rising claims costs have seen reinsurers reduce exposures to natural peril risks and look to increase the attachment levels their coverage responds at.

All this, with an increase in pricing, created a very positive environment for the reinsurance sector, which rating agencies say is now extremely well reserved and in robust financial health.

Tide turning

However, despite the first six months of 2025 having seen $80bn in natural catastrophe losses – and the UK enduring its hottest summer on record – the tide is starting to turn.

Manuel Arrive, director of insurance at Fitch Ratings, explained: “We believe the pricing power will move to the reinsurance buyers. It will put pressure on premium growth at a time when clients losses are increasing.”

Geopolitical uncertainty is also adding to the concerns of businesses and their (re)insurers. However, experts believe that the days of the hard reinsurance market have  come to an end – and that the softening rates seen in recent renewals will only continue.

This pushes reinsurers into a softening cycle, at which point they must ask whether they want to chase market share to maintain premium income, or keep the underwriting pens in their pockets.

The wise move would be to avoid chasing premium, but history tells us that the market has struggled to resist that temptation.

Capacity will need to be allocated or returned to shareholders, with reinsurers finding themselves walking somewhat of a tightrope. It is good news for insurers.

Insured impact

What is clear is that prices for those who have not suffered claims are highly likely to reduce – and continue to do so into 2026.

Policyholders have to hope that reinsurance savings for insurers will be passed down to their insureds.

The scale of this price reduction will be very class specific, however, and therein lies one of the big questions insurers will be seeking to answer.

Will reinsurers move back to assuming broader treaty risks, or will insurers have to place their programmes on a class by class basis?

S&P Global Ratings director and lead analyst Robert Greensted explained: “Reinsurance pricing has passed its peak, which will likely temper earnings prospects for global reinsurers over 2025 and2026. The industry saw an increase in insured losses from natural catastrophes during 2025, especially in the first quarter.

“Despite pressure to broaden coverage and lower attachment points, underwriting discipline across the global reinsurance industry has not wavered.”

One factor to watch will be attachment levels. There has been talk from some of the major rating agencies that reinsurers may well look to lower the level at which they are happy to attach the cover.

The need to assume more risk before the security of reinsurance is accessed has been a major issue for insurers, especially at a time when a changing climate and new risks have tested their ability to deliver the required levels of coverage.

The ability to lower the level of risk they are forced to assume will be a major plus, but there are rumblings from reinsurers that, while there is a willingness for a degree of movement on pricing, terms and conditions is a point they will not concede.

This all makes this week’s Rendezvous conference in Monte Carlo a crucial week for everyone involved in the insurance chain.