The April 1 renewals – the year's second major reinsurance negotiation cycle – proceeded without disruption to property catastrophe pricing even as the Middle East conflict sent shockwaves through specialty insurance markets globally, according to Howden Re.
Risk-adjusted property catastrophe rates returned to levels last seen in the early 2020s, extending a softening trend first observed at the January cycle. In Japan, the focal point of the April 1 renewals season, catastrophe excess-of-loss programs recorded price reductions of up to 20%, with a point estimate of 16%.
Commissions on property surplus and earthquake quota share treaties rose by 2–5 percentage points, with the upper end most commonly reached on earthquake quota share placements.
Andy Souter (pictured above), head of Asia Pacific at Howden Re, attributed the outcome to reinsurer appetite, improving underlying performance and the absence of major losses.
Program structures were largely unchanged from expiring terms, with reinsurers focused on protecting established positions while selective capacity providers sought to expand their shares.
The contrast with the specialty market was stark. The Strait of Hormuz has been effectively closed since late February, after coordinated US and Israeli strikes on Iranian military targets prompted Tehran to shut the waterway. Repricing in marine war risk, energy and political violence lines reached several multiples of pre-conflict levels.
The scale of the financial exposure underscores the severity of the dislocation. JPMorgan estimated total insurance exposure for Gulf-operating vessels at approximately $352 billion, while Jefferies projected that potential industry losses from at least seven damaged vessels could reach $1.75 billion.
Multiple P&I clubs have since canceled war risk cover in the region after reinsurers withdrew support, compounding capacity constraints across marine and energy portfolios.
The Middle East conflict did not directly affect the April 1 renewals for property catastrophe, but Howden Re cautioned that its macro effects could extend well beyond directly impacted specialty lines.
"This renewal was completed in a largely benign property-catastrophe environment, insulated from the immediate disruption in the Gulf," said David Flandro, head of industry analysis and strategic advisory at Howden Re.
"That said, a sustained energy supply shock raises the risk of renewed inflationary pressure and higher interest rates, dynamics that have historically affected reinsurance capital and pricing across all lines, not just those directly exposed to the conflict."
Mid-year 2026 renewals are expected to face more complex conditions as the full impact of the Middle East conflict is absorbed, with upward pricing pressure anticipated across marine, energy and political violence lines. For property catastrophe, the trajectory will depend on first-half loss activity and developments in energy pricing, inflation, interest rates and capital market volatility.
Souter added that technical discipline and active monitoring would remain essential as the market moves into what he described as a more complex mid-year environment.
