Autonomous, an independent research firm known for in-depth financial analysis across re/insurance sectors, has provided a detailed update on the state of the European reinsurance market following the completion of the key 1 July renewal period.
Their latest assessment points to a softening in pricing after several years of steep rate increases, yet highlights that underwriting standards remain largely intact and the broader market appears measured and rational in its response.
Since 2017, the market experienced a near doubling in reinsurance rates, with 2022 marking a particularly strong year for pricing.
According to Autonomous, reinsurers are now reinvesting accumulated profits back into the market, easing some of the upward pressure on rates.
Despite this moderation, conditions remain attractive, and pricing—though lower—is far from weak. Capacity is ample, and many reinsurers are open to expanding their books, but this is being done with care rather than at the expense of quality.
The 1 July renewals, one of the industry’s four major treaty renewal dates, offer a clear window into current market conditions. Autonomous observes that the environment has not changed drastically since the 1 January renewals, with rate reductions occurring within a broadly stable framework.
They explain that reinsurance pricing is typically expressed as a “rate-on-line”—a measure determined by a range of factors including loss history, credibility of the cedant, and the likelihood of future claims.
Autonomous cautions against reducing renewal outcomes to simple headlines, particularly in relation to property catastrophe risk. They note that while events such as the recent wildfires in California initially prompted speculation of a hardening US market, those expectations have not materialised.
Renewal outcomes depend on a variety of factors such as the adequacy of existing pricing, geographic exposure, past losses and the balance between proportional and excess-of-loss contracts. This complexity often leads to discrepancies between broker-reported data and the results published by individual reinsurers.
The firm notes that the 1 July renewals tend to be heavily weighted toward U.S. property-catastrophe risk, especially exposures tied to hurricane seasons in the Gulf of Mexico.
These are often placed on an excess-of-loss basis, though quota share arrangements are also used, particularly for broader portfolios. Despite this concentration of catastrophe risk, reinsurers have remained cautious and focused on maintaining underwriting discipline.
Reinsurance, Autonomous emphasises, is a relationship-based business. Cedants value long-standing partnerships with reinsurers that provide consistent support, especially when dealing with complex or less standard risks. Reinsurers that can underwrite across a variety of lines and offer stability over time are typically more valued by clients. Autonomous also points out that price-sensitive buyers have historically been targeted by new market entrants, who tend to use aggressive pricing in lieu of an established track record.
However, the current cycle has seen very few newcomers, which has helped support pricing stability and kept the market from becoming overly competitive.
While it is difficult to assign an exact figure to year-on-year rate changes due to the many moving parts involved, Autonomous believes that understanding broader pricing trends remains essential.
They identify 2023 as the peak of the most recent hard market cycle and point to 2014–15 as the low point of the previous soft market. The current environment, in their view, represents a transitionary phase—characterised by moderation, but not deterioration.
Autonomous concludes that although prices are easing, the fundamentals of the market remain solid. Reinsurers are continuing to deploy capital prudently, new capacity is not disrupting pricing, and underwriting discipline is holding firm.
The shift in pricing does not signal a loss of control but rather a normal progression within the cycle—one where market players appear more focused on sustainability than short-term growth.
