Global Reinsurance Faces Six-Year Catastrophe Review

Over the past six years, the global reinsurance market has been repeatedly challenged by significant losses stemming from natural catastrophes. According to a recent report by international rating agency AM Best, annual losses during this period have exceeded USD 100 billion. This sustained high loss environment has compelled reinsurers to reassess their risk management strategies and contractual structures, although the sector’s overall capital base remains robust.

The AM Best report highlights that reinsurance contracts continue to maintain high attachment points, with certain exclusion clauses tightened further. This reflects a cautious market sentiment, with participants recalibrating their risk appetite. At the same time, social inflation—driven by increasing litigation and claim settlements—and global economic uncertainty are exerting additional pressure on reinsurers.

Despite these challenges, the data indicate that the reinsurance sector’s capital foundation is strong. At the start of 2026, traditional reinsurance capital stood at approximately USD 540 billion, with Insurance-Linked Securities (ILS) contributing an additional USD 120 billion. Elevated interest rates have bolstered investment income, which has helped mitigate some of the underwriting strain.

For 2026, AM Best has assigned a Stable outlook to the global non-life reinsurance market, a downgrade from the previous Positive outlook. This adjustment primarily reflects softening property reinsurance pricing and sustained pressure on liability lines.

Renewal reviews up to 1 January 2026 show that property reinsurance rates have decreased by 10–20%, particularly in regions without recent claims activity. While pricing has largely returned to pre-2023 levels, catastrophe-linked contracts remain above standard thresholds, allowing reinsurers to preserve some margin.

Contract terms continue to evolve to balance risk and capacity. While high attachment points are largely maintained, some contracts feature expanded wording and selective narrowing of exclusion clauses. Aggregate coverage has increased, though such contracts generally retain high attachment points or secondary event protection.

Global Reinsurance Snapshot – Start of 2026

AM Best emphasises that, notwithstanding the ongoing pattern of natural catastrophe losses, the reinsurance sector remains stable. A strong capital foundation and disciplined contractual structures underpin this stability. However, the market’s softening stance, coupled with social inflation and global economic volatility, will continue to test reinsurers’ strategic agility and operational flexibility.