Autonomous marks T&Cs as the new reinsurance battleground following mid-year rate declines

A new report from Autonomous suggests that reinsurers are broadly keen to defend against any further loosening of terms and conditions (T&Cs), amid industry debate over the robustness of the response, leading the firm to note that T&C’s are now the new battleground.

Referring to broker Guy Carpenter’s property catastrophe rate-on-line index which was down 16% at mid-year, accelerating down from -12% at the January 1 renewal, analysts at Autonomous noted that its refreshed analysis of contracts shows stable attachment points in absolute terms, although not keeping pace with inflation or cedent growth.

In its report, Autonomous emphasises that the last hard market was defined not just by a strong and prolonged pricing upturn, but perhaps even more importantly, by a significant tightening of terms and conditions (T&Cs).

However, as the tides have now turned, reinsurers have had to relinquish the hard market gains, with pricing having served as the focal point, while reinsurers remain prepared to surrender margin, although at a rapid pace given the over-capitalisation of the industry.

“We think reinsurers are broadly keen to defend against a loosening of T&Cs, and there is much debate as to the robustness of the response. In this year’s renewal rounds, the reinsurers have suggested that T&Cs have held “broadly” stable, or words to the effect, while brokers have highlighted some forms of weakening,” Autonomous explained.

“With pricing heading towards adequacy, the focus of buyers’ attention through 2027 will be to test the industry resolve on treaty terms and design. Reinsurers have made a big push to elevate out of frequency covers (or earnings protection) in favour of severity (balance sheet/ capital protection). If cedents and brokers ultimately emerge successfully on this topic it will significantly challenge the notion that there has been any structural change in the reinsurance industry, while opening the door to greater loss exposure,” the firm continued.

Importantly, Autonomous highlights that from the viewpoint of an outsider, it can be difficult to effectively monitor the strength of T&Cs and substantiate claims of either weakening, or indeed stability.

However, the firm notes that following recent meetings with reinsurers, the message of stability has been repeated, whilst there has also been some acknowledgement of relaxation being seen across certain areas, such as hours clauses, named perils, extensions and reinstatements.

“It remains to be seen how much further will be unwound as the soft market continues, although reinsurers remain far more concerned around frequency than severity,” Autonomous said.

As well as this, Autonomous observes that aggregate contracts are also making a sharp return, with improved structures.

Reflecting on the tight market conditions that were displayed throughout 2023 and 2024, Autonomous stated that there was a significant withdrawal of capacity and willingness to support aggregate contracts.

“Over the last 18 months or so, there has been a steady drip-feed of newsflow around new placements of aggregate contracts, although reinsurers in the main have been keen to play down their significance, and importantly also, note their low appetite for and involvement in these deals,” the firm explained.

Furthermore, data showcased from over 30 companies highlights how there has been an increase in appetite across the market for aggregate reinsurance contracts.

In 2021, among the companies in Autonomous’ sample, 54% freely reported that they had catastrophe aggregate excess of loss protection. However, as reinsurers repriced these contracts significantly higher and withdrew capacity, this then fell to just 26% in 2024, but then rose again in 2025 to 37%, and then to 42% in the firm’s latest sample for 2026.

Autonomous explained that while there has been an increase in demand for aggregate, as well as an improvement in appetite to supply this coverage, it does appear that these structures are healthier than was observed in the prior soft market.

The company also highlighted how over the last two years, the industry has seen successful aggregate placements from companies such as Zurich, Unipol, Intact and others.

Most recently, Australian insurer Suncorp last month secured an aggregate reinsurance contract across five years, with an annual attachment point of AUD $1.85 billion.

“Ultimately this appears a mixed conclusion on the stability of T&Cs. Certainly there hasn’t been a collapse in reinsurer discipline, but at the margin there is some deflation of the “risk minimization” of reinsurance contracts. Specifically on aggregates, reinsurers are offering again, but with tight limits and higher attachment points (as well as higher per event attachments). But market forces and excess industry capacity are such that there would appear to be some inevitability to a further loosening into next year, particularly on erosion of retentions, limits and sub-limits,” Autonomous added.

Concluding: “As we progress through the half-year reporting season, we should get additional data-points from the primary insurers which have renewed contracts across the last quarter. We will continue to monitor this activity.”

As reinsurance capital providers move into more defensive positioning to protect their underwriting margins, alongside active cycle management they will also become increasingly focused on terms, both defending them and identifying where they can offer clients something additional that still sits within their risk tolerances.

Should the rest of 2026 pass without any major industry loss events then 2027 looks set to be even more competitive, as there are no signs reinsurance capital will shrink.

In a reinsurance market characterised by excess capital, new entrants and strong investor appetite, there is a notable lack of new opportunities being created (the protection gaps still grow) that could absorb some of the capital liquidity, which means as well as rate pressure, next year could see much more meaningful pressure on terms and capital provider’s defence of T&Cs and structure may need to become much more rigorous.