The reinsurance market is seeing a wave of positive changes as we move through 2025. Recent reports from Aon and Gallagher Re highlight a competitive environment that favors buyers, with plenty of capacity and price cuts for accounts that haven’t faced losses. This trend follows similar favorable conditions noted in January.
Aon’s report, “Reinsurance Market Dynamics – April 2025 Renewal,” reveals that the April renewals have brought good news, especially for insurers in Japan, South Korea, and India. Insurers with loss-free property catastrophe accounts in these regions enjoyed double-digit price reductions. The report attributes this to better results from reinsurers and a relatively calm period for natural disasters in Asia.
Gallagher Re also noted that buyers benefited from abundant reinsurance capacity, leading to better renewal outcomes, including risk-adjusted price cuts and improvements in coverage. However, reinsurers are still cautious, maintaining adequate rates across various lines of business after a significant re-evaluation of risks in recent years.
April is typically a lighter renewal period for U.S. insurers, with the bulk of renewals happening in June and July. These months are crucial for insurers in the U.S., Australia, and New Zealand, which are among the largest markets for property-catastrophe reinsurance.
Looking ahead, both Aon and Gallagher Re expect favorable conditions to persist during the mid-year renewals. They believe that if no major disasters occur, the trend of differentiated rate reductions will continue, allowing reinsurers to balance their capital deployment with the need for competitive pricing.
A key factor driving this buyer-friendly atmosphere is the record capital levels reported by reinsurers. Gallagher Re noted that traditional reinsurance capital has reached an all-time high of $655 billion, while overall reinsurance market capital, including alternative sources, stands at $769 billion.
Despite the positive outlook, the recent wildfires in Los Angeles are a concern. The estimated costs of these wildfires range from $32 billion to $38 billion, which have used up a significant portion of reinsurers’ catastrophe budgets early in the year. While the impact of these losses is manageable, they could influence how reinsurers approach the mid-year renewals.
Overall, the reinsurance market remains robust, with reinsurers continuing to support insurers, even those with significant wildfire exposure. As the year progresses, the industry will keep an eye on how these developments affect pricing and capacity in the coming months.