The reinsurance industry can anticipate more rate softening next year, a Guy Carpenter executive has reported, while price decreases accelerate and terms and conditions broaden.

“How fast it happens will depend on the catastrophe and geoeconomic risks through the rest of 2025,” said Laurent Rousseau, the firm’s chief executive of Europe, Middle East and Africa and global capital solutions.

Speaking in a Guy Carpenter webinar on market trends, Mr Rousseau expected things to occur in an orderly manner as reinsurers pushed for growth.

“Now is the time for clients to optimise their reinsurance protection,” he said. “The reinsurance industry is clearly and increasingly in a buyer market.”

He added that the climate around reinsurance is becoming more complex.

Reinsurers are navigating trade wars, geopolitical wars, culture wars, promise and risk around artificial intelligence, emerging technologies and extreme weather events.

“In uncertain times there is a tendency to focus on the short term and on local issues, whereas reinsurance is all about diversification over time, the long term and the global risks universe,” he said.

Jayan Dhru, Guy Carpenter’s global head of business intelligence, said the reinsurance sector is thriving despite the complexity.

“Reinsurers are demonstrating resilience and adaptability,” he said. “Reinsurance is a defensive sector. Its demand and pricing are less affected by economic cycles and market volatility generally.”

Mr Dhru said the sector has seen an increase in traditional and alternate capital, which is projected to grow to around $650 billion this year, up from $530 billion in 2022.

“This abundant capital actually supports ongoing capacity and stability in the market discipline,” he said. “Underwriting and surging investment income has resulted in healthy earnings growth over the last two years.”

The industry's combined ratio — an important measure of profitability — was below 90 per cent in 2023 and 2024 and is forecast to remain that way through 2027.

“This indicates efficient risk management and underwriting discipline,” he said.

James Boyce, CEO of Guy Carpenter global specialities, said the reinsurance market is navigating an evolving risk landscape and complex losses primarily due to shifting geopolitical factors, economic inflation and claims dynamics.

“Despite this, the market is healthy, supported by strong fundamentals such as reinsurer consensus on pricing adequacy, increased retained earnings growth in dedicated reinsurer capital and continued appetite for expansion,” Mr Boyce said. “New entrants are further diversifying capital sources and generating additional competition.”

Mr Boyce said geopolitical tensions, particularly the ongoing Russia-Ukraine conflict, remain a key driver, especially in the aviation and marine sectors.

The extent of the impact from this on composite reinsurance placements was still unclear to him.

“Expectations remain that the market will suffer a significant loss due to the restraint of leased aircraft in Russia,” he said. “The negotiations between insurers and reinsurers are highly complex and in most cases covered by non disclosure agreements.”

He expected discussions to go on for some time, with the outcomes dependent on the terms and conditions prevailing in the reinsurance contracts at the time of the event, that varies from client to client.

“Our aviation and marine teams are working closely with our clients, using our internally developed proprietary tools to be the best advocate for each client’s specific situation,” Mr Boyce said.