Howden Re has published a new report titled “Who dares wins: Innovation in an era of hard market softening,” analyzing the current state of the reinsurance sector as it transitions from a prolonged hard market. The report was produced by teams specializing in industry analysis, strategic advisory, catastrophe analytics, and research and development.
David Flandro, Head of Industry Analysis and Strategic Advisory at Howden Re, stated:
“We know from history that the current ‘hard market softening’ phase can be profitable for underwriters who innovate as risk selection comes to the fore. This is achieved through superior business intelligence, diversification across geographies and perils, and superior technical execution. As return hurdles rise and rates moderate, economic value will be achieved by those who dare to win.”
Tim Ronda, CEO of Howden Re, added:
“Howden Re empowers clients by combining deep reinsurance expertise with capital markets access, strategic advisory and our global MGA platform. This breadth allows us to deliver solutions that go beyond traditional broking – enabling clients to unlock new sources of capital and create long-term value. In a market where innovation and precision matter more than ever, our role is to stand alongside clients in pursuing resilience and market leadership.”
The report outlines several key trends affecting the industry. It highlights that risks once labeled as ‘secondary’—such as severe convective storms, floods, and wildfires—are now considered primary concerns for reinsurers. Casualty lines remain difficult but may still offer profits for those prepared to take calculated risks. Opportunities are also emerging in areas like cyber insurance, renewable energy sectors, managing general agents (MGAs), and developing markets.
Natural catastrophe losses have surpassed $100 billion each year since 2020. This ongoing trend has limited capacity in the sector while reducing profit margins and making insurers more cautious about exposures with frequent claims. The report suggests that careful risk selection remains important even during times of high loss activity; allocating resources to well-performing international markets can help maintain strong returns through diversification.
According to Howden Re’s findings, recent moderation in the reinsurance market has given some relief after significant pricing pressures experienced between 2022 and 2023. However, as conditions become less cyclical at this stage of softening prices, success will depend on focusing on data quality, transparency during negotiations on structure and coverage terms rather than just price alone. Adjustments such as changing retentions or aggregate protections could make a meaningful difference for upcoming contract renewals.