Despite an ease on pricing, reinsurance programme structures are expected to remain largely unchanged, with reinsurers holding firm on elevated attachment points following the post-2023 reset, leaving primary P&C insurers to continue retaining a greater share of secondary-peril losses and associated earnings volatility, according to Moody’s Ratings.
However, since the reset in 2023, when reinsurers moved away from these exposures, primary insurers have assumed a larger portion of the losses due to the increase in reinsurance attachment points.
“We expect that insurers will continue to retain a large proportion of losses from secondary perils and will remain exposed to earnings volatility as reinsurers refrain from taking on such risks,” Moody’s Ratings said in a new report.
“Reinsurers are likely to stand firm on high attachment points for insurers’ excess of loss (XoL) treaties for 2026 renewals.”
Nonetheless, while attachment points are expected to hold, property reinsurance rates decreased by up to as much as 20% at the January 1, 2026, renewals, according to various broker reports.
Furthermore, Moody’s Ratings anticipates that protection buying expenses for buyers will continue to come down in 2026 from their recent peak.
The agency also noted that competition among reinsurers has intensified as their profitability has improved to strong levels, with alternative capital inflows growing.
“Declines in reinsurance costs will mitigate pressure on insurers’ margins from falling pricing for primary property insurance. We expect some insurers to increase their reinsurance protection against high-severity major perils by raising their XoL protection limits.
“These developments, along with efforts to reduce exposure to catastrophe-prone areas, will moderate growth in insurers’ retained catastrophe losses,” Moody’s Ratings added.
In the same report, Moody’s Ratings also maintained its stable outlook on the global property and casualty (P&C) insurance sector for 2026.
The rating agency indicated that it anticipates insurers will persist in achieving good profitability and robust capitalisation, despite a backdrop of subdued global economic growth.
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