Property market to surge with capacity at 1/1 2025 renewals: Aon

The property reinsurance market is flashing “clear signals” of more capacity arriving in time for the January 2025 renewals, backed by strong third-party capital and supported by insurance linked securities (ILS)—barring major catastrophe losses before year-end, Aon has claimed ahead of the Monte Carlo Rendez-Vous.

“There are clear signals that significantly more reinsurance capacity will be available going into the 2025 renewals, absent any large catastrophe losses between now and the yearend,” Tracy Hatlestad, global property leader for reinsurance at Aon, told investors during a pre-Monte Carlo renewal season briefing.

“Coupled with strong participation from third-party capital and ILS investors, reinsurers’ capacity at January 1 will be more than ample to meet demand,” Hatlestad said. But she cautioned that capacity will remain disciplined and market consolidation is likely.

Global property-cat reinsurance demand is expected to remain strong in 2025, fuelled by inflation, exposure growth, and updated catastrophe models, with demand anticipated to grow up to 5 percent after a nearly 10 percent rise in 2024, Hatlestad indicated.

“Further increases in demand for property reinsurance will likely absorb some of the additional supply, but an easing of underwriting conditions should be expected if primary peril losses remain benign,” she added.

The market is “well-capitalised, robustly rated, and ready to absorb major hurricane losses”—although the North Atlantic Hurricane season will remain a key factor for January renewals, Hatlestad noted.

“Pricing competition is expected to broaden across the market.”

Competitive pricing

According to Aon, the current market trajectory suggests more competitive pricing in renewals, with insurers expecting reinsurers to meet quoting and authorisation deadlines consistently.

“All things being equal, pricing competition is expected to broaden across the market at renewals in 2025, with meaningful risk-adjusted rate decreases for the best-performing risks and a better balance for the whole market,” she added.

“To inflation trends, we think those have eased. Our internal analysis of the global property-cat market on a multi-model and adjusted historical loss view suggests that even with softening rate trends, reinsurers will meet their target return on equity levels with average or expected loss outcomes. We expect that to occur as we price 2025 risk,” she concluded.

For more news from the Rendez-Vous de Septembre (RVS) click here.

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