Signs of softening in LatAm prospects

The Latin American reinsurance market is undergoing a period of recalibration, with rate dynamics a central theme that appears to be dividing the industry on whether the trend will lead to softening or continued hardening. 

That was a major theme that emerged from a survey conducted by Intelligent Insurer, ahead of Miami Reinsurance Week. Responses from a survey indicate that just 18 per cent expect rates to flatten in the next 12 months, while 55 per cent believe we are heading for a soft market. This suggests that, although the market remains firm, the pace of rate increases may be slowing compared to previous years. One respondent, an underwriter at a reinsurer, shared: “Rates have improved, but the question is whether they are adequate given increasing catastrophe exposures and inflationary pressures.

Supply and demand 

“The reinsurance capacity entering the region is being met with strong demand, which prevents rates from softening too quickly. “At the same time, there is a cautious optimism that some lines will see moderation.” Other respondents pointed to various macroeconomic and market-specific factors influencing rate movements, with one writing: “The demand-supply balance currently tilts in favour of supply, thereby keeping rates in check.” Another remarked: “The supply-demand balance in LatAm remains fragile. “While we see some stabilisation, catastrophe risks and inflationary pressures continue to put upward pressure on pricing.” Several key influences on rate changes were identified: more frequent and severe natural catastrophes keeping pressure on pricing, while regulatory changes regularly alter the risk landscape. Economic conditions such as inflation are also affecting insurers’ cost structures and reinsurance purchasing behaviours.

A broker’s perspective 

Brokers in the region are playing a crucial role in ensuring clients understand the changing dynamics. One participant from a global broker shared: “Clients are becoming more strategic about their reinsurance purchases. “While rate increases are expected in high-risk areas, there are also opportunities to negotiate better terms based on loss experience and risk mitigation strategies.” As 2025 unfolds, market participants remain watchful of economic trends, geopolitical shifts and underwriting appetites. A senior pricing actuary noted: “We’re seeing more disciplined underwriting, but the challenge is ensuring that rate adjustments keep pace with loss trends. “The risk of underpricing is still a concern in some segments.

Retention challenges 

When asked which lines of business showed the greatest growth potential for the year ahead, a clear 64 per cent singled out property catastrophe and specialty lines. Both property and casualty and the life and health sectors were voted joint second while cyber came in third, chosen by a third of all participants. Participants also noted an increased demand for alternative reinsurance structures such as parametric solutions. One respondent explained: “Rising global sea surface temperatures and drastic change in weather patterns is leading to increased demand for property catastrophe and parametric weather indexed covers. “In addition, the experience of the Covid pandemic has brought back into focus the need for health covers.” A broker specialising in Latin American markets observed: “Clients understand the need for rate adjustments, but they’re also exploring ways to optimise their reinsurance spend. “This has led to more interest in structured solutions.” Latin America’s reinsurance pricing environment remains firm, but reinsurers must navigate client pushback, claims inflation and regulatory challenges. A data-driven approach to underwriting and innovative product offerings will be key to maintaining a competitive edge

For more news from Miami Reinsurance Week Today, click here.

Did you get value from this story?  Sign up to our free daily newsletters and get stories like this sent straight to your inbox.