Moderate catastrophe losses and abundant capital are creating increasingly favorable conditions for insurers, although Aon warned that a single major hurricane could quickly alter the market’s trajectory.
Global economic losses from natural catastrophes reached an estimated US$111 billion during the first half of 2026, approximately 25% below the 21st-century average, according to Aon’s latest catastrophe report. Insured losses totaled around $47 billion, broadly in line with the average recorded over the past 26 years.
During a virtual webinar, Michal Lorinc (pictured on the right), head of Catastrophe Insight at Aon and a co-author of the report, described the overall loss picture as relatively restrained.
“The first half of 2026 was quite eventful, but the loss picture we’ve seen over the past six months was quite moderate,” Lorinc said. “There were no exceptional losses at the individual event level in terms of the insurance and reinsurance industry.”
US severe convective storms remained the largest insured-loss driver, followed by winter storms. Together, the two perils accounted for more than 70% of global insured catastrophe losses.
Although severe convective storm losses continued to dominate the first half, they were significantly below the record-breaking totals recorded in 2023, 2024 and 2025. The experience nevertheless reinforced the growing effect of frequent, midsized events on insurers’ earnings.
“Lower-than-recent-average severe convective storm losses reduce some of the activity cedants are passing on,” said Tracy Hatlestad (pictured on the left), global head of property for Aon's Reinsurance Solutions. “However, we’ve seen repeated midsized events that still create meaningful earnings volatility for property writers.”
The manageable loss environment has coincided with a significant accumulation of reinsurance capital.
Aon estimated that global reinsurance capital stood at approximately $790 billion at the end of the first quarter. That capital base, combined with relatively low catastrophe losses reaching reinsurers, intensified competition during the spring and summer renewal season.
Insurers sought to reduce year-over-year spending while adding capacity for frequency protection and aggregate coverage. Third-party capital also continued to expand, accounting for nearly 20% of total industry capital, compared with a low-teens share a decade ago.
This growth in third-party capital has consequently moved the market beyond supplemental capacity, Hatlestad said. Insurers are increasingly using the market to secure multiyear protection at fixed costs and strengthen their overall capital position.
Reinsurers have also experienced several years of relatively limited ceded losses following the market reset of 2023, when higher rates and increased retentions were introduced after difficult results between 2018 and 2022.
“From a five-year ceded-loss perspective, we are now sitting well below the expected loss-ratio levels that reinsurers would look for in their portfolios,” Hatlestad noted. She said that imbalance was a strong indicator of further pricing pressure, provided the Atlantic hurricane season did not produce substantial ceded catastrophe losses.
Florida was a notable exception to broader discussions around reduced spending. Aon recorded between $5 billion and $7 billion of additional demand for Florida reinsurance coverage, driven by growth among domestic insurers and the continued depopulation of Citizens Property Insurance Corporation.
“It resulted in one of the most positive renewals we’ve seen in Florida in more than a decade,” Hatlestad said.
Despite expectations for a below-average Atlantic hurricane season, Aon cautioned against interpreting a weaker basin-wide forecast as an absence of material landfall risk.
Strengthening El Niño conditions are expected to increase wind shear across the Atlantic’s main development region, potentially suppressing overall hurricane activity. However,
Lorinc said the industry’s loss outcome would still depend heavily on where individual storms formed and made landfall. “It does not eliminate the risk in the US,” he said. “The loss picture can change very quickly when there is a storm that affects a concentration of exposure in the US.”
Still, Aon expects competition to remain favorable heading into the January 1, 2027 renewals – provided the remainder of the year does not produce a significant insured catastrophe.
“The bottom line for the first half of 2026 is that we’re in a strong capital position,” Hatlestad said. “Insurance companies are buying more capital and are positioned to be resilient throughout the rest of 2026.”
