At least $115bn to $125bn of cat losses needed to shift property pricing trajectory: Gallagher Re

In order for the current downward trajectory of pricing in property insurance and reinsurance to be meaningfully shifted broker Gallagher Re says that an anomalously high loss burden will be required.

Writing in the broker’s Q1 2026 natural catastrophe and climate study, which reported an at least $20 billion catastrophe loss burden for the first-quarter of this year, the broker highlights that it’s going to take a meaningful uptick for the current softening of prices to be derailed.

That $20 billion of Q1 2026 insured natural catastrophe losses is 26% lower than the decadal average of $26 billion, and 47% below the most recent 5-year average, according to the reinsurance broker.

“The below-average tally of insured losses in Q1 2026 will put the reinsurance market into an even better position to withstand higher individual or aggregate losses during the rest of the calendar year,” Gallagher Re explains.

Adding that, “Even given the continuing softening we saw at the January 1 and April 1 reinsurance renewals (with property cat pricing down 15% to 25%), it will require an anomalously high loss performance to meaningfully shift pricing behavior.”

In fact, catastrophe losses have been manageable for the global insurance and reinsurance industry for a number of quarters now.

Q1 2026 was the fourth consecutive quarter where Gallagher Re has estimated that aggregated insured losses fell below $40 billion.

“This is the longest such stretch since the six consecutive quarters from Q1 2019 through Q2 2020,” the broker added.

After that period, a “notable uptick in catastrophe losses that shifted the trajectory towards a hardening reinsurance renewal cycle by the end of 2020,” Gallagher Re further explained.

Record levels of dedicated traditional and alternative reinsurance capital are applying pressure on property pricing, the broker highlighted.

Leading Gallagher Re to explain, “We now estimate that it would require a single event (or series of large events) resulting in an insured loss of at least USD115 billion to USD125 billion — above expected average annual catastrophe losses — to meaningfully impact the trajectory of pricing in the property sector of the industry.”

The market is so well-capitalised and appetites still so high for returns from the reinsurance sector, that major loss events or some other disruption which erase capital from the industry are required for the pressure to now come off pricing, it seems.

Of course, a period of quarters with above average losses could change the picture entirely over the coming year.

It’s worth remembering that, with insured exposures having risen at least as fast as sector capital, the chances that loss events can drive larger financial impacts has risen as well.