Reinsurance Reaches $715 Billion

The property insurance industry is facing a turning point. While some markets are stabilizing, others—like California—are bracing for major disruptions. Meanwhile, insurers are doubling down on AI and satellite-driven risk assessment, fundamentally reshaping how properties are insured and claims are paid. Here’s what’s making headlines this month.

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April 1 Renewals Results

The April 1 reinsurance renewals revealed favorable conditions for buyers in key markets:

• The April 1 reinsurance renewals showed continued softening trends, with risk-adjusted rate reductions across key markets like Japan, South Korea, and India. Double-digit rate declines were observed for property catastrophe programs in these regions, driven by strong reinsurer competition and low natural catastrophe losses in the prior year.^{1, 2}

• Buyers leveraged favorable conditions to secure improved terms. Larger cedants in Japan, for example, managed costs by retaining more risk or restructuring their reinsurance towers.²

• Facultative reinsurance capacity expanded significantly in Asia-Pacific, creating additional opportunities for insurers to optimize their programs^.4

Reinsurance Market and Alternative Capital

The reinsurance market remains robust, bolstered by record capital levels:

• Global reinsurer capital reached a record $715 billion in 2024, up $45 billion year-over-year. This growth was fueled by strong earnings and increased investment in alternative capital sources like catastrophe bonds and sidecars.^{3, 4}

• Alternative capital hit $115 billion, marking a 7% annual increase. Catastrophe bonds alone neared $50 billion in outstanding limit as of Q1 2025, reflecting growing investor confidence.³

• This influx of capital has improved market stability while encouraging innovation through alternative risk transfer mechanisms like sidecars and collateralized reinsurance.

• Despite softening rates, reinsurers maintained discipline to achieve adequate risk-adjusted returns amid geopolitical uncertainties and inflationary pressures.^{2, 4}

Natural Disasters and Catastrophe Insurance

Natural disasters remain a major driver of industry challenges:

• The Southern California wildfires earlier this year caused insured losses estimated between $32 billion and $38 billion and total economic damages of up to $164 billion. These fires are now among the costliest natural disasters in U.S. history.^{1, 5} Hear more about wildfires by listening to Hemant Shah's special series, in which he interviews leading wildfire experts from the risk and insurance space. 

• First-quarter global natural catastrophe losses are expected to be the highest in over a decade, with ceded losses from the wildfires alone consuming up to one-third of major reinsurers’ annual catastrophe allowances.¹

• Climate-related risks continue to dominate industry concerns. In 2024, insured global natural catastrophe losses exceeded $100 billion for the fifth consecutive year, with severe convective storms accounting for $57 billion of these losses.^{6, 7}

The frequency and severity of climate-related events continue to pressure insurers to refine risk models and pricing strategies while emphasizing proactive risk mitigation measures.

News from Broker Firms

Broker firms have been active with acquisitions, appointments, and awards:

• Aon: Released its Reinsurance Market Dynamics—April 2025 report highlighting buyer-friendly conditions during the April renewals and record capital levels in the reinsurance market.⁴

• Willis Towers Watson: Announced a strategic acquisition of a regional brokerage firm specializing in wildfire risk management to enhance its capabilities in high-risk areas (specific details forthcoming).

• Gallagher: Expanded its presence in Southeast Asia by opening new offices in Vietnam and Indonesia to tap into the growing demand for commercial property insurance solutions.

• Alliant Insurance Services: Appointed a new senior vice president to lead its real estate practice on the West Coast, focusing on wildfire-prone markets.

• Lockton: Received recognition as one of the "Best Places to Work" for the 17th consecutive year due to its strong employee engagement initiatives.

These developments highlight brokers’ strategic efforts to expand capabilities and recognize their workforce while adapting to evolving market demands.

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