Big loss may not spark hard market
A $100 billion catastrophe event may not be enough to cause a hard market in the reinsurance industry, according to analysts at Berenberg. The industry has transitioned into a softening market phase, and a single large event is unlikely to revert it back to a hard market cycle.
The analysts’ report on the 2026 hurricane season notes that ample capacity and lower catastrophe losses will likely continue to pressure reinsurance pricing into the January 2027 renewals.
Terms and conditions are expected to be a primary area of contention, as reinsurers’ share of losses has decreased from 20% to 13%. Berenberg analysts observed that the current financial conditions in the reinsurance market make it unlikely that a $100 billion hurricane would be enough to cause a hard market.
In 2022, following Hurricane Ian, traditional reinsurance capital declined by 17% year-over-year, or $100 billion. However, the scarcity of capital and large loss experience resulted in pricing increases in subsequent years.
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Berenberg explained that considering the current financial conditions, a $100 billion hurricane may be barely enough to halt pricing declines. The analysts also noted that 2022’s global insured catastrophe losses were $150 billion, with Hurricane Ian accounting for $55 billion of that amount.
According to Gallagher Re, first-half 2026 insured losses are approximately 30% below their 10-year average level, at $46 billion. Berenberg added that a single $100 billion event, or a series of large events, would not be enough to result in material capital depletion.
Aon estimated total global insured losses from catastrophe events in the first half of 2026 at $47 billion, significantly down from the broker’s $100 billion estimate from the first half of 2025.
Colorado State University forecast only one major Atlantic hurricane event, suggesting that the likelihood of material losses occurring during the 2026 hurricane season and affecting the pricing situation appears to be limited. Berenberg noted that the current moderate El Niño conditions are expected to intensify over the next few months, making it the dominant factor for the upcoming hurricane season.
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Ultimately, a large hurricane could be unavoidable, but the winners will be companies that are well-positioned to capitalize on the hard market following the event, according to Berenberg analysts. This means having the balance sheet to withstand the shock and being able to deploy capital.
Assuming the 2026 wind season proves to be very benign, as expected, with insured losses well within budgets, then pricing pressure is likely to persist for reinsurers at the January 2027 renewals.
The key area of uncertainty is how resilient terms and conditions remain, and whether reinsurers would prefer to offer lower prices in exchange for unchanged terms and conditions at the upcoming renewals.
