As the reinsurance industry emerges from another pivotal renewal season, market participants are no longer speaking about a single pricing cycle.
Instead, the industry is navigating “multiple cycles” unfolding simultaneously across property, casualty, and regional portfolios, according to Swiss Re senior vice president and head of regional 4, Nate Bunck (pictured).
“In past years, you could point to a single market cycle and say, ‘This is where we are,’” Bunck said. “Today, the market is far more complex. Property behaves differently from casualty; the Southeast is not experiencing the same pressures as the Midwest, and specialty lines have their own trends. We’re really operating in a landscape of multiple cycles.”
This fragmentation has made the reinsurance landscape more sophisticated – and more volatile. While property markets are showing signs of stability, casualty and liability lines remain under sustained pressure.
Beneath this dynamic, however, one constant persists: reinsurers continue to face global insured losses hovering around $100 billion annually.
The start of the year brought a sharp reminder of catastrophe risk. Devastating wildfires in California – considered a “black swan” event – jolted markets and highlighted the ongoing unpredictability of secondary perils.
Although the North Atlantic hurricane season has so far been average, Bunck cautioned against complacency. “We’re seen (hurricane) events well into November,” he said. “While conditions feel better than last year, it’s simply too soon to say we’ve turned a corner.”
The property reinsurance market has been trending toward stabilization after several years of steep price hardening. Capacity returned in 2024, and some predicted a softening environment heading into 2025. Bunck acknowledged that pricing is becoming “healthier” relative to the extreme hard market of recent years, but noted significant caution remains.
“We all recognize the market is healthier,” he said. “But given the last several years of elevated catastrophe losses, we’re not at a point where reinsurers are ready to materially relax terms. The need for reinsurance as a backstop remains very strong.”
One of the most significant shifts in reinsurance risk perception involves severe convective storms (SCS), such as hail, tornadoes and straight-line wind events, which have generated outsized losses in recent seasons.
“There was a time when SCS was treated as a secondary peril,” Bunck said. “The industry is now viewing it with far more sophistication. We’re seeing Midwestern carriers become much more proactive in risk management, looking at roof quality, siding resilience, and mitigation partnerships.”
This proactive approach is creating differentiated outcomes for carriers, he added. “Two insurers might face the same storm, but the one that has invested in mitigation strategies is seeing significantly better performance.”
While property lines have stabilized, casualty remains firmly in the grip of social inflation and litigation abuse. Both have expanded, and small businesses are being impacted in ways that were once reserved for large corporate defendants – a trend that Bunck believes will continue in the near term.
“It’s going to be a multi-year challenge. Some states are making progress, but there’s no silver bullet. Reinsurers will continue to shine a light on this risk and challenge cedents to manage it effectively.”
Swiss Re CEO of Property & Casualty Reinsurance US, Monica Ningen, warned that litigation trends are reshaping the economics of insurance across all sectors, from large corporations to small businesses.
"We’re seeing growing strain on the civil justice system, with more lawsuits yielding damages that often outpace the actual harm," said Ningen. "Jury awards in the tens of millions are becoming more frequent, shaped by emotion, not just evidence. This trend isn’t limited to large corporations. Small and mid-sized businesses face similar outcomes when serious injuries are involved."
Despite a more stable property environment and improving modeling capabilities, structural pressures remain embedded in the US insurance market. For Bunck, the reliance on reinsurance as a stabilizing force is not going away anytime soon.
Bunck emphasized that reinsurance appetite will increasingly favor cedents who demonstrate risk management leadership, not just rate adequacy.
“Raising rates alone isn’t a solution,” he said. “Reinsurers are looking for partners who are proactively fine-tuning underwriting, improving resilience, and outperforming their peers.”
