By Charlotte Cansdale-Rose, Head of Property at New Dawn Risk.
Property (re)insurance has entered a new phase.
After several years of elevated pricing and disciplined capacity, buyers are now seeing a more competitive market. Rates have fallen at every major renewal point in 2026, with reductions accelerating into the mid-year renewals.
For buyers, capacity is plentiful, competition is strong and there is genuine opportunity to secure better terms.
While the price of capacity is changing, much of the discipline, structure and risk differentiation established during the harder years has remained. In other words, the market is becoming softer on price without necessarily becoming softer on underwriting.
Call it the great decoupling: this cycle, price and discipline are moving apart. Rate is reverting to soft-market levels; discipline, largely, is not – and that split is not something every past downturn has managed.
Capital is driving the change
The fundamental force behind the current softening is capital.
Several consecutive years of strong reinsurer profitability have rebuilt balance sheets and attracted capital back into the sector. Global reinsurance capital reached a record $785 billion at the end of 2025, with third-party capital up 18% to roughly $136 billion, while alternative capital continues to complement traditional capacity. Catastrophe bond issuance has kept pace too, with the outstanding market now sitting at around $64 billion.
At the same time, catastrophe losses have so far been relatively benign in 2026.
The result is abundant capital, healthy reinsurer balance sheets and capacity that is not being consumed at the rate the market might otherwise have expected. That creates competition, and increasingly that competition is flowing through to buyers.
At the January renewals, property catastrophe reinsurance pricing fell by around the mid-teens. Similar movements were seen at the April renewals, with reductions accelerating further across many June and July renewals.
For clients coming to market in the second half of the year, that means more choice, greater competition and, in many cases, more negotiating leverage than buyers have enjoyed for several years.
But falling rates are only one part of the story.
Price is moving faster than structure
One of the most notable features of the current market is that, while pricing is falling, many of the structural improvements secured during the 2023 market reset have remained in place. Tighter attachment points and greater discipline around risk selection have broadly held despite significant reductions in rates. Lloyd’s own Q2 2026 Market Message made this point explicitly, framing profitable growth in a softer market as dependent on discipline rather than volume, and industry renewal analysis has described the January renewal as a genuine re-balancing of the market that remained “competitive, but still disciplined.”
This is important because, historically, a softening market can see underwriting standards loosen as insurers compete for growth. That does not appear to be happening uniformly this time. Instead, the market is competing aggressively on price while retaining many of the structural protections established during the harder years. Recent market outlooks note that carriers remain selective toward high-quality risks, cautious in more challenging geographies, and that technical underwriting standards are not being relaxed despite the flood of new capacity entering the market.
It would be an overstatement, though, to say nothing has given. Deductibles are the clearest exception: recent market commentary points to attachment points and deductibles slipping slightly as competition intensifies, and clients are increasingly using rate savings to buy back named storm and wind/hail percentage deductibles that were pushed up during the hard market. Underwriters are more willing to flex deductibles case by case.
What would change the trajectory?
The obvious question is how long this can continue, and it isn’t just a pricing question – the more interesting version of it is whether discipline holds up as well as price has moved.
A major catastrophe loss, or a series of significant events, would undoubtedly test the current abundance of capacity. Industry estimates suggest that losses materially above expected annual catastrophe losses, potentially in the region of $125bn to $150bn, could be required to meaningfully disrupt the current pricing trajectory.
The precise threshold is impossible to predict, but the broader point is clear: the market currently has considerable capacity to absorb losses.
A single event therefore does not necessarily mean an immediate return to hard-market conditions. A more substantial erosion of capital, or a sustained period of elevated catastrophe activity, would be needed to fundamentally change the supply-and-demand equation.
The 2026 Atlantic hurricane season will remain an important watchpoint. Forecasts have pointed towards a potentially below-normal season, although a lower event count offers no protection against a single severe landfall.
Capital and losses aren’t the only variables worth watching, though. The harder question is whether discipline holds up if softening continues at this pace into 2027. Structure has held through three renewal seasons of steep rate reductions so far, but that isn’t the same as saying it will hold indefinitely. Every additional point of rate given up increases the pressure on underwriters to find savings elsewhere, and, as Lloyd’s own commentary on the cycle makes clear, discipline tends to be tested hardest not at the start of a soft market but the longer it runs.
The next competitive advantage may be efficiency
Alongside the softening market, the way capacity is deployed is changing.
Consortia arrangements and “smart-follow” capacity are becoming increasingly established across the Lloyd’s property market. Algorithmically driven follow capacity is no longer experimental, while digital platforms are making it easier to connect risks with markets according to defined underwriting appetites.
This is not coincidental. When rates are high and margins are strong, the industry can tolerate relatively inefficient processes. When rates come under sustained pressure, efficiency becomes much more important.
Technology is therefore becoming part of the soft-market story. The question is no longer simply who has capital available to deploy, but who can deploy it efficiently, consistently and at an acceptable cost.
Growing AI adoption across the Lloyd’s market points to the same shift. While much of the current application remains focused on productivity and efficiency rather than replacing core underwriting judgement, even relatively small improvements in the cost and speed of accessing, assessing and deploying capacity can become commercially meaningful.
The next phase of competition may therefore be fought not only on price, but on efficiency too.
A good market can still create bad decisions
For buyers, these conditions are attractive. But soft markets can create their own risks.
Lloyd’s has itself flagged the pace of property rate softening as a supervisory concern, underlining the importance of underwriting discipline as pricing momentum moderates. When pricing falls quickly, there can be a temptation to focus too heavily on the immediate saving. That can lead to decisions that look attractive at one renewal but prove less valuable when the market turns.
The better opportunity is to use the current environment strategically: reviewing programme structures, testing alternative sources of capacity, considering risk retention and using increased competition to improve the overall quality of the placement rather than simply reducing its cost.
Some risks also remain structurally difficult, however. Wildfire and brush-exposed property, for example, continue to attract less competition than much of the broader market. Risk quality and exposure characteristics still matter, even when capacity is plentiful. The January 2025 Los Angeles wildfires, among the largest insured wildfire loss events on record, are a reminder of why this exposure keeps being priced and structured differently even as the broader market softens.
The softening market should therefore not be interpreted as a return to indiscriminate capacity. It is a more selective form of competition.
The decoupling is also not guaranteed to hold. Price and discipline diverged this cycle, but the gap can close in either direction: rate could stabilise while structure remains firm, or, if competition intensifies further, standards could eventually give ground to match pricing. Which way it breaks will say a lot about how this cycle is remembered.
The soft market is an opportunity, but not just to buy cheaper
After years in which buyers were primarily focused on securing capacity and managing rising costs, the balance of negotiating power has moved materially in their favour. The industry is giving back some of the pricing gains of the 2023 reset while retaining many of the underwriting and structural improvements that came with it. At the same time, technology is changing how increasingly abundant capital can be deployed.
The result could be a market that is cheaper, more competitive and more efficient, without necessarily being less disciplined. That is the opportunity in the great decoupling: a rare window where the cost of capacity is falling but the quality of it isn’t. For buyers, that creates a valuable window.
The objective should not simply be to achieve the lowest possible renewal price. It should be to use today’s favourable conditions to build a programme that remains competitive, resilient and fit for purpose when the cycle inevitably changes again.
The best outcome of a soft market isn’t always the cheapest placement. For most buyers, it’s a robust placement that can withstand the next hard market.
Sources
Insurance Business America, “Property-cat rates fall up to 25% as reinsurance capital hits record high”: https://www.insurancebusinessmag.com/reinsurance/news/breaking-news/propertycat-rates-fall-up-to-25-as-reinsurance-capital-hits-record-high-580411.aspx
Artemis.bm, “Property cat reinsurance down 14.7%, retrocession down 16.5% at Jan 2026 renewals”: https://www.artemis.bm/news/property-cat-reinsurance-down-14-7-retrocession-down-16-5-at-jan-2026-renewals-howden-re/
Reinsurance News, “2026 renewal sees sharpest decline in risk-adjusted global property rates since 2014”: https://www.reinsurancene.ws/2026-renewal-sees-sharpest-decline-in-risk-adjusted-global-property-rates-since-2014-howden/
The Insurer, “US property catastrophe rates down 15% to 25% at April 1, brokers report”: https://www.theinsurer.com/ti/news/us-property-catastrophe-rates-down-15-to-25-at-april-1-brokers-report-2026-04-01/
Costero Brokers, “State of the Global Insurance Market: Q2 2026”: https://costerobrokers.com/state-of-the-global-insurance-market-q2-2026/
Amwins, “State of the Market – 2026 Outlook”: https://www.amwins.com/resources-and-insights/market-insights/article/state-of-the-market-2026-outlook
Insurance Business America, “Derecho losses mount, but property market unlikely to turn, says broker”: https://www.insurancebusinessmag.com/us/news/catastrophe/derecho-losses-mount-but-property-market-unlikely-to-turn-says-broker-586168.aspx
Cottingham & Butler, “The Hard Market Turned: Where Rates Stand in Q1 2026”: https://www.cottinghambutler.com/post/the-hard-market-turned-where-rates-stand-in-q1-2026
Insurance Business UK, “Underwriting discipline breaks down as markets soften”: https://www.insurancebusinessmag.com/uk/news/breaking-news/underwriting-discipline-breaks-down-as-markets-soften-585170.aspx
Coverager, “Howden: Reinsurance rates reset at January 2026 renewals”: https://coverager.com/howden-reinsurance-rates-reset-at-january-2026-renewals/
Insurance Business UK, “Lloyd’s flags mounting pressures as market heads into 2026”: https://www.insurancebusinessmag.com/uk/news/breaking-news/lloyds-flags-mounting-pressures-as-market-heads-into-2026-558203.aspx
