Stability in US Casualty Reinsurance Market Amid Challenges

Howden's report on January 1, 2026, reveals stability in the US casualty reinsurance market, despite ongoing challenges like social inflation impacting liability losses. The market maintains consistent capacity and unchanged reinsurer participation. Notably, increased syndication, driven by line-size constraints and competitive market dynamics, marks a significant trend.

The report emphasizes the growing significance of casualty insurance-linked securities (ILS) and sidecars. These vehicles are increasingly appealing to primary insurers with extensive, stable portfolios. They have the potential to shift future market supply-demand dynamics by diverting premiums from traditional reinsurance channels.

US Market Dynamics

Within the US, reinsurers are keen to boost allocations as property rates decline and catastrophe-exposure premiums shrink. Whole-account agreements, blending property and casualty lines, attract clients seeking streamlined transactions. Most treaties renewed under existing terms, though cedents with strong data acquired higher ceding commissions, enjoying a 0.5–1 point enhancement.

However, loss-affected accounts faced reduced shares and more tough negotiations on commissions as insurers aimed to address heightened claims costs. Howden identifies influences from past loss developments, particularly from 2014 to 2019, impacting 2026 negotiations. Consequently, casualty rates are predicted to trend upward by 8–9%, although demand for reinsurance protection remains robust in the US casualty sector.

International and London Market Trends

Internationally, the casualty market saw minor softening during renewals, with many programs benefitting from decreased rates due to increased capacity and stable loss histories. However, US-exposed programs confronted more challenging renewals due to volatility and potential high damages in legal scenarios. In the London market, increased capacity from new and existing participants, including US and Bermudian reinsurers, addressed capacity gaps left by reduced property exposures, resulting in a 5-10% rate cut for London casualty excess of loss programs, despite slight claims inflation.

Howden portrays a reinsurance landscape requiring strategic maneuvering to exploit market dynamics, emphasizing the importance of effective regulatory compliance and risk management amid evolving industry conditions.