Global update
Treaty renewal outcome
Commentary provided by Guy Carpenter
At the January 1, 2026 renewal, treaty capacity increased as new reinsurers diversified into construction and engineering (C&E) and alongside established reinsurers. This resulted in treaty programs generally being oversubscribed, with reinsurance programs on average being 33% over-placed, compared to 25% in 2025.
Reinsurer treaty capacity reached its highest level since 2020, at US$367 million; US$17 million of new capacity entered in 2026. Positive results for insurers in recent years and the absence of large loss activity led cedants to consider structural options and improve treaty terms and conditions.
This occurred despite increased projected loss ratios due to ongoing rate pressures. Quota share commissions increased by 0.25% to 2%, which compressed reinsurer margins. Excess-of-loss risk-adjusted rate changes ranged from decreases of 10% to 20%, reflecting the portfolio mix, structure, and loss history. Construction and engineering rating reductions were aligned with those in the marine, and energy and power sectors.
Renewals
Overall, January 1, 2026 renewals generally led to insurers’ deploying more capacity and offer more competitive pricing, particularly for well-performing and lower-risk construction accounts. Higher quota-share commissions and improved excess-of-loss economics led to insurers providing broader coverage options and higher limits for many while scrutinizing complex or loss-impacted risks. This led to greater flexibility in program structures and terms for companies, especially on large or tailored projects.
However, rising projected loss ratios and reinsurer scrutiny of high-severity exposures saw insurers selecting risks carefully. Adjustments to deductibles and sub-limits or narrowing exclusions were more common than across-the-board rate reductions.
Regional breakdowns
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