Insurers are preparing for continued earnings volatility in 2025, with heightened risks from natural catastrophes, including convective storms, floods, and wildfires. As a result, companies are facing pressure from persistently high attachment points, according to a report from Howden, an international insurance and reinsurance broker.
David Howden, Founder and CEO of Howden, emphasized that a strategy based solely on pricing is no longer sufficient in today’s market. “The dawn of a new cycle presents fresh opportunities as insurers look for new business, particularly in areas like cyber and renewables,” Howden said.
Howden’s latest report, Past the Pricing Peak, highlights a significant shift in the reinsurance landscape following a prolonged period of rising rates. The report attributes this change to increased deployable capacity and favorable supply dynamics, which have led to risk-adjusted rate reductions in several sectors during the January 2025 reinsurance renewals.
The demand for reinsurance during the January renewals was primarily driven by volatile loss experiences, rising exposures, and updated risk models. Despite the ongoing threats of catastrophes, heightened competition across both commercial insurance and reinsurance markets has resulted in softened pricing. The growing surplus capacity, supported by traditional reinsurers and capital markets, has further exacerbated this trend, with reinsurers increasingly focusing on data transparency and tailored, granular approaches.
Key trends during the 2025 renewals included a noticeable differentiation by client and program, with reinsurers prioritizing bespoke solutions to better address specific risk profiles.
Looking ahead, insurers are bracing for an unpredictable year, with the importance of adapting to new market dynamics and emphasizing diversification, particularly in emerging areas like cyber security and renewable energy, becoming ever more critical.
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