Howden's 1.1.25 market report
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Past the pricing peak
The first half of the 2020s will be forever synonymous with global turbulence. The sequence of events that unfolded during the period is indicative not only of the ubiquity of risk in today’s world but also the interconnectivity.
Our report is something of a wake-up call for the industry. Carriers have experienced strong growth for the best part of a decade now but, as we show today, a reliance on price alone is no longer enough to sustain that momentum. The dawn of a new cycle brings fresh opportunity as insurers look for new business to drive growth.
- David Howden, CEO
Read the key takeaways from our new report on the (re)insurance sector below, and download the PDF.
Accumulating and intersecting crises since the turn of the decade – a global pandemic, devastating (and escalating) wars, commodity shocks, significantly higher prices, financial market volatility, weakening global trade, high debt levels – have ushered in a new world (dis)order that carries far-reaching implications for security, commerce, investment, supply chains and political stability.
Add into the mix elevated losses from natural catastrophes (every year since 2020 has seen annual insured costs exceed US$100 billion), more episodes of civil unrest, adverse litigation trends, evolving cyber threats, fraying social cohesion (exacerbated by the spread of misinformation and disinformation), and businesses and (re)insurers are navigating a hostile operating environment.
Following a prolonged run of rate increases across the (re)insurance sector (exacerbated by accumulating and intersecting crises), the degree of deployable capacity now available in the marketplace marks an important break with the recent past and heralds a new phase in the cycle.
Reinsurance renewals at 1 January 2025 saw rate reductions overall, reflecting a desire for growth on the part of reinsurers. Client-level differentiation was again a key feature of renewals, underlining the need for data transparency and relationships.
Healthy supply led to risk-adjusted rate reductions for the first time this decade
Source: Howden, NOVA
With pricing now falling from a high base, structural changes imposed during the hard market are likely to be more enduring. Higher earnings volatility for insurers looks set to remain a feature in 2025 as they continue to absorb the lion’s share of (elevated) catastrophe losses due to higher attachment points.
Finding risk transfer solutions to close protection gaps and sustain market growth will become increasingly important as rate momentum wanes. The dawn of a new cycle brings fresh innovation opportunities as insurers look to expand coverage in new areas.
Since 2021 so-called non-peak losses have outstripped peak losses each year
Source: Howden, NOVA
In 2024, premiums less the impact of pricing grew for the first time since 2019
Source: Howden
