Traditional reinsurance capacity the key driver of price competition: Moody’s survey

A recent survey of protection buyers shows that the largest share of respondents agree that traditional reinsurance capacity is the key driver of price competition in the property marketplace, while the availability of alternative and insurance-linked securities capital is seen as a much less significant factor.

This survey of reinsurance buyers was undertaken by Moody’s Ratings and the results published just in advance of the 2026 Monte Carlo Rendez-vous event.

For those who attended the Rendez-vous between the years 2012 and 2017, the discussion was often that the catastrophe bond market and insurance-linked securities fund managers were driving the rising capital levels and causing price competition.

As we regularly reported through those years, that plainly wasn’t the case. The cat bond and ILS market was much smaller at the time and many of the largest reinsurers in the world continued to write rising premium volumes in US property catastrophe reinsurance at consecutive renewals, while also agreeing to far more relaxed terms and conditions through that period, which was the real driver of that softening phases supply-demand imbalance.

This time around things are very different and the market does now acknowledge that traditional reinsurance capital remains the key reason for the imbalance and the softening of rates, although it’s important to note that doesn’t mean it’s always the influencer (as reinsurers respond to competitive threats as well).

When asked “What in your view are the main drivers of recent price trends in the property reinsurance market, including the rationale for primary companies to pay less for natural catastrophe reinsurance cover?”, half of Moody’s Ratings survey respondents said this is caused by traditional capital.

Abundant traditional reinsurance capacity comes top in answers to the question by a significant margin.

The survey results show that the relatively benign major catastrophe loss environment is seen as the next biggest driver of softening property reinsurance rates, followed by the fact property reinsurance prices had been too high during the hard market phase.

After that, availability of alternative reinsurance capital ranks, but only at around 5%, so significantly below the perceived influence traditional reinsurers are having on the market cycle.

It’s interesting how sentiments have changed over the last decade, from an environment where often alternative and ILS capital was blamed for driving softening of the market, to now one where the majority of people recognise that traditional reinsurers remain the biggest driver of competition and as a result the biggest influence on prices.

The respondents are in good company, as AM Best recently also called out traditional reinsurance capacity as being more impactful to softening the market than insurance-linked securities capital.