After a significant year for insurance-linked securities (ILS) in 2025, as the market transitions into 2026, it will be essential to observe how the industry evolves, especially through the introduction of new product types, the involvement of first-time participants, and the expansion of peril classes, according to Lara Mowery, Chief Commercial Officer at reinsurance broker Gallagher Re.
Artemis spoke to Mowery around the launch of the broker’s January 2026 reinsurance renewal report. She discussed a range of topics, including what the broker expects to see from the ILS and catastrophe bond market throughout 2026.
“We fully expect to see continued interest in the ILS space, both from investors providing capital and from buyers on the property catastrophe side. Pricing has become increasingly attractive, and we’re also seeing a growing appetite to expand the range of covered perils,” Mowery explained.
“Early examples of catastrophe bonds for new peril types are emerging, giving buyers more options when evaluating how ILS solutions fit within their risk management strategies. That combination of broader choice and favourable pricing will continue to drive activity in the sector. We anticipate additional first-time sponsors and further expansion in both structures and peril types going forward.”
Looking beyond the property catastrophe space, which has historically led the cat bond market, within the last few years there has been a growing interest in cyber.
“When cyber bonds first appeared, there was what we refer to as an “innovation charge,” a pricing premium for gaining access to diversified capital. That premium has largely disappeared, resulting in more attractive pricing and, in turn, more engagement and conversation from buyers,” Mowery noted.
The CCO also emphasised that the market is seeing heightened interest in long-tail business.
“Several deals targeting long-tail exposures are expected to close around the January 1 renewal period, representing a segment of the market that has been relatively untapped until now. It is quickly emerging as an area of meaningful activity,” she explained.
“Looking ahead to 2026, it will be interesting to watch how the market continues to develop, whether through new product types, first-time participants, or expanding peril classes. Overall, it remains a highly dynamic and evolving market.”
Turning to casualty, the market has gained a lot attention from alternative capital providers in recent years, particularly through the emergence of casualty sidecars.
According to Mowery, there are a few key factors that are driving this momentum.
“First, the underlying casualty market has undergone significant change. After several consecutive years of rate increases, tighter underwriting discipline, and more conservative limit offerings, insurers have focused heavily on improving pricing and overall market fundamentals,” Mowery told Artemis.
She continued: “As a result, there is now heightened scrutiny of casualty products, deeper data analysis, and active debate, particularly through the January 1 renewals, about what current portfolio performance signals for the health of the casualty sector.”
Importantly, Mowery stated that there is no single consensus view on the outlook. With the CCO affirming that across both reinsurers and ILS, opinions vary on whether recent improvements are sufficient to support long-term profitability.
“Some believe development patterns are shifting in a positive direction; others remain cautious and question whether the market has evolved far enough. This commentary largely applies to U.S. casualty-exposed business, whereas international casualty is in a somewhat different position.
“What is consistent, however, is the amount of capital available. Investors are actively looking for ways to participate in reinsurance, which is prompting closer examination of whether the casualty sector, like property, offers an opportunity to deploy capital responsibly.”
Concluding: “The core question is whether participants are comfortable with current dynamics and can structure involvement in a way that aligns with the growth in rate and the reshaping of original products. These considerations are driving the increased interest we’re seeing.”
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