Who dares wins; Howden Re's latest report calls for innovation in an era of hard market softening
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Howden Re is pleased to release our latest report “Who dares wins: Innovation in an era of hard market softening” as the reinsurance market stands at a pivotal juncture, having crested the wave of the hard market phase.
In this report, created by Howden Re’s Industry Analysis and Strategic Advisory, International Catastrophe Analytics, and US Catastrophe R&D teams, we highlight how those who innovate and adapt in the next phase of the market will win.
David Flandro, Head of Industry Analysis and Strategic Advisory commented:
“We know from history that the current ‘hard market softening’ phase can be profitable for underwriters who innovate as risk selection comes to the fore. This is achieved through superior business intelligence, diversification across geographies and perils, and superior technical execution. As return hurdles rise and rates moderate, economic value will be achieved by those who dare to win.”
Tim Ronda, CEO, Howden Re commented:
“Howden Re empowers clients by combining deep reinsurance expertise with capital markets access, strategic advisory and our global MGA platform. This breadth allows us to deliver solutions that go beyond traditional broking – enabling clients to unlock new sources of capital and create long-term value. In a market where innovation and precision matter more than ever, our role is to stand alongside clients in pursuing resilience and market leadership.”
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Key findings:
- Those who innovate and adapt will thrive: Exposures previously described as ‘secondary’ perils such as severe convective storms, floods and wildfires are no longer secondary. Casualty lines remain challenging, yet economic profit remains achievable for reinsurers willing to innovate and take calculated risks. Emerging opportunities include cyber, renewables, MGAs and growth in emerging markets. However, in this hard market softening phase, top-line expansion can no longer rely mainly on pricing momentum; underwriters must innovate in order to maintain profitable growth.
- A nat-cat state of mind: Since 2020, natural catastrophe losses have exceeded US $100 billion annually, constraining capacity, eroding margins and prompting caution towards frequency-driven exposures. Yet, history shows that careful risk selection can still deliver favourable results in periods of elevated loss activity. In particular, allocation to well-performing international markets can sustain high-return portfolios, whilst delivering diversification benefits from uncorrelated exposures. Resilience in this environment requires careful consideration of long-term data trends, thorough portfolio concentration assessment and enhanced analytics.
- Disciplined value creation: Market moderation has brought short-term relief to cedents following the acute pricing pressures of 2022-2023, but the shift from cyclical peak to softer conditions requires careful navigation. Renewal outcomes are increasingly shaped by data-quality, transparency and engagement across structure and coverage, rather than by price alone. Focussing on adjustments with the highest strategic and economic impact, such as retentions, aggregate protection, cost certainty or rebalancing reinsurance expenditure can improve the likelihood of achieving meaningful outcomes in upcoming renewal negotiations.
