2026 Executive Outlook | Peter Askew, Guy Carpenter Canada

In 2026, Canadian property and casualty insurers will benefit from a softening reinsurance market, shifting away from harder market conditions that have persisted for several years.

The property catastrophe reinsurance market has been entrenched in a firm or hardening market since 2021, with the average rate-on-line (reinsurance premium divided by the limit purchased) increasing each year. The 2025 renewal was particularly challenging following record catastrophe losses in 2024 of $8.9 billion. During this period, Canadian insurers were forced to accept reduced coverage at increased cost.

2026 will have a different outcome. 

Right now, most Canadian reinsurance treaty renewals are still in the price discovery phase. However, with reinsurers reporting favourable global performance overall, the majority of reinsurers seeking to grow, and limited 2025 catastrophe loss experience both in Canada and globally, all signs point to a softening reinsurance market.

This is good news for insurance companies. They’ll be able to purchase 2026 reinsurance programs for a reduced spend on a risk-adjusted basis. What are the other implications?

Capacity: Reinsurance brokers conduct in-depth analysis of modelling data in concert with quotes to recommend final market-clearing pricing to clients, ideally with some buffer to be able to attract a sufficiently diversified panel of reinsurers. With underlying attractive property catastrophe reinsurance trading conditions, reinsurers will want to defend their positions on reinsurance panels even with downward pricing pressure and may also attempt to realize some growth. Supply will exceed demand and many programs will be oversubscribed. At the mid-year renewals, reinsurer capacity exceeded demand by 20% globally. We anticipate excess capacity to increase for 2026 renewals.

Enhanced coverage: The combination of spend reduction and surplus capacity from reinsurers will create opportunities for cedents to purchase additional protection and improve earnings stability and capital preservation. These could be achieved by unwinding some coverage restrictions introduced during the market reset at the 2023 renewal, for example by reducing or removing treaty deductibles or exclusionary language – or seeking new coverage to address frequency of losses in the form of third-event, aggregate or other creative structured solutions. The softer market will provide the opportunity to explore reinsurance structures that have not been on offer through harder market conditions.

Ultimately, the market environment for 2026 will create a material economic benefit relative to the challenging market conditions that have persisted for several years. This benefit includes the increased resilience of the Canadian insurance market.