While reinsurance volatility remains a significant factor influencing property insurance markets, industry conditions are beginning to normalize after several years of hard-market pressures. By the end of 2024, dedicated reinsurance capital reached $463 billion, driven by improved asset valuations, retained earnings and increased interest from institutional investors. Additionally, pricing across most reinsurance rates fell at mid-year for loss-free properties by as much as 10 - 15%.
But what does this signal for professionals in the space in 2026? In a recent interview with Casey Carter, VP of REInsurePro, he agreed that strong reinsurer profitability and an influx of capital have helped restore capacity across the sector, creating a more competitive environment for insurers and brokers.
“When we talk about carrier appetite and capacity, reinsurance volatility is still one of the biggest drivers,” Carter told IB. “But it’s very important to recognize that the market has started to shift. We’re no longer in the peak hard market conditions that we saw in 2022-2024.”
With the return of capacity into the system in a meaningful way, driven by strong reinsurer profitability and new capital entering the market, Carter told IB that carriers today have more options than they did even a year or two ago.
“We’re seeing more competition among reinsurers, which is starting to put pressure on pricing and, in some cases, expand available capacity. That said, I wouldn’t really describe carrier appetite as completely wide open. Reinsurers are still very focused on disciplined deployment of capital. A lot of the structural changes that came out of the hard market such as higher attachment points and more selective participation in CAT exposed areas are still very much in place.
“So, while capacity is improving, it’s still being allocated carefully, especially in high-risk areas like coastal or wildfire zones. What that means in practice is that we’re in a more balanced environment, you could say. There’s more capacity than before, but underwriting selectivity hasn’t gone away.”
Although pricing has begun to soften in certain segments, underwriting standards have not followed the same trajectory. Years of elevated catastrophe losses and growing concerns around secondary perils such as hail and severe convective storms have reinforced the industry's focus on disciplined risk selection. Higher deductibles, increased scrutiny of COPE data, and continued emphasis on roof age, construction quality and loss history remain common underwriting requirements.
“We’re seeing a bit more flexibility in terms and structure than we did a year ago, but underwriting is still holding firm,” added Carter. “Carriers recognize that even though prices are softening, the underlying loss activity, especially from secondary perils is still a key concern.”
Perhaps the most visible sign of market improvement is the shift in premium trends. After several years of significant rate increases, many loss-free accounts are beginning to see modest reductions, moved along largely by increased competition and greater market capacity.
"A lot of that is coming from more competition and more capital in the market, which is starting to shift some of the negotiating power back to buyers," Carter said.
However, he also cautioned that the market should not be viewed as having returned to historical soft-market conditions. Pricing remains elevated relative to pre-hard-market levels, particularly for insureds with catastrophe exposure or adverse loss histories.
"For many insureds, the impact is more about flat renewals or slight relief rather than meaningful reductions," Carter added.
Real estate investment portfolios remain particularly sensitive to reinsurance trends because of their concentration of risk and exposure to catastrophe-prone regions. According to Carter, geographic clustering continues to draw close attention from reinsurers, who remain focused on aggregation concerns even as overall market conditions improve. Rising property valuations have also increased total insured values, limiting the extent to which premium savings can offset higher exposures.
"Even in a softening market, that aggregation can limit capacity or drive pricing," Carter said. “At the same time, rising valuations over the past few years have significantly increased total insured values, and that hasn’t reversed. So even if rate pressure is easing slightly, the overall premium spend doesn’t always come down in a meaningful way.”
Another key factor here for Carter is the continued focus on secondary perils. Hail and severe convective storms have been major drivers of loss activity, and reinsurers are still very cautious in those areas. That’s led to ongoing use of higher deductibles, tighter terms and, even in some cases, sublimits even as competition increases.
“So, while conditions are improving, real estate investors are still operating in a higher-cost, more structured insurance environment than they were a few years ago,” Carter told IB.
For insurance agents and brokers, the current transition period presents an opportunity to create additional value for clients.
Carter recommends beginning renewal discussions well in advance, typically 90 to 120 days before expiration, to maximize access to returning market capacity and encourage competition among carriers.
“Starting early is still critical,” Carter added. “As an agent you can utilize this to your advantage on behalf of your insured, which is something you should always be doing anyway.”
Looking ahead, the outlook for 2026 remains cautiously optimistic. Traditional reinsurance capital is expected to grow by more than 6% over the coming year, underpinned by continued profitability and sustained institutional investor interest.
And while reinsurance volatility remains a defining influence on property insurance, market conditions are gradually becoming more balanced. Capacity is returning, competition is increasing and pricing pressures are easing in some segments.
“At the end of the day, what we’re seeing is a market that’s evolving. Reinsurance volatility hasn’t gone away, but the environment is becoming more balanced,” explained Carter. “Capacity is returning, competition is increasing, and pricing is starting to ease but discipline remains.
“For carriers, that means staying selective. For real estate investors, it means continued pressure on costs, but with some relief emerging. And for agents, it’s an opportunity to lean in, to be proactive, strategic, and help clients take full advantage of a market that’s improving.”
This article was created in partnership with REInsurePro
