Despite potential claims stretching into the billions, events are not expected to shift the dial on pricing.
The marine and specialty reinsurance market will kick off negotiations for 1 January renewals amid a cloud of uncertainty.
The spectre of two major claims hangs over the market: the Baltimore Francis Scott Key Bridge collapse and aviation losses from stranded aircraft in Russia. However, by the time contracts are finalised in the New Year, there is little prospect that either issue will be close to resolution.
Meanwhile, the CrowdStrike incident caused a ripple of concern across the cyber market over the summer, although loss expectations quickly settled at a manageable level.
Within traditional specialty lines, the threat of unconfirmed claims potentially stretching into the billions might be expected to add firepower to a hardening market. However, a canvass of senior executives suggests that as renewal discussions commence in earnest, the most likely outcome at this stage is a stable renewal.
“You have got to go back to the fundamentals of any market, and that is supply and demand,” said Gallagher Re’s head of marine, energy and aviation, Nick Croxford. “And we are in a market that has got a surfeit of capacity.”
In cyber and political violence, getting the right reinsurance protection directly impacts ongoing relevance to clients.
If anything is predictable for the (re)insurance industry at the moment, it is that the world is becoming increasingly unpredictable.
Society is more connected than ever, but equally more volatile. Instability escalates faster, and while this creates opportunity for a risk-focused industry, it also requires a fundamental rethink of how (re)insurance protection is structured.
Specialty reinsurance is a broad church and, in some classes—such as marine—large shock losses like the Baltimore bridge collapse remain within the parameters of events reinsurance is designed to absorb.
However, this is not true across all lines. In political violence and terrorism (PVT), the changing nature of conflict means reinsurance structures are increasingly unfit for purpose. For strikes, riots and civil commotion, the likelihood of unrest occurring simultaneously across multiple locations has shifted the focus to aggregation and whole-country exposures.
At the 1 January 2024 renewals, mismatches between inward and outward coverage meant insurers were running significantly more net risk. It remains unclear whether this will be resolved in the upcoming renewal season.
In cyber, similar concerns persist. While recent outages may generate manageable losses, they highlight how severe a global cyber event could be. In catastrophe scenarios, quota share structures may not fully address tail risk at scale.
In both PVT and cyber, aggregation risk presents a structural challenge. Securing effective protection is not only about absorbing losses—it is critical to maintaining relevance to clients.
The Baltimore bridge loss is still expected to be significant—potentially the largest-ever marine loss—but it is more likely to halt rate softening rather than trigger a renewed hard market.
“We probably had the beginning of a bit of a softening at 1 April, maybe it was already visible at 1 January,” said Christian Silies, head of global aviation, marine and energy reinsurance at Sompo.
“This will prevent further softening, and it’s a reminder of how sizeable these claims can be.”
Market appetite continues to be supported by confidence in pricing adequacy following the significant correction at 1 January 2023, driven by the fallout from the war in Ukraine.
“Not so long ago, we had a very big market correction post the Ukraine invasion, and we saw wholesale changes to structures, pricing and coverage,” said Aspen’s global head of specialty reinsurance, Olly Goodwin.
“Specialty reinsurance is a good place to be at the moment. It’s attracted a lot of new capacity.”
The collapse of the Francis Scott Key Bridge has prompted ongoing speculation about the scale of losses, with outcomes potentially taking years to determine.
On one end of the spectrum, liability could be limited to approximately $43.7mn under maritime legislation. On the other, a worst-case scenario could see losses exceeding $3bn, potentially surpassing the Costa Concordia disaster.
“If that scenario plays out, the retro market would be most heavily impacted,” said Goodwin, noting the potential for pricing pressure to flow through reinsurance and into primary insurance.
However, even in a severe loss scenario, improved pricing and retention structures mean the impact on overall market profitability may be contained.
“If the rest of the year is benign, a large portion of the marine reinsurance market will still make money,” Croxford said.
Uncertainty also surrounds aviation losses linked to the war in Ukraine. Aircraft worth an estimated $9bn remain stranded in Russia, with liability yet to be determined through ongoing legal proceedings.
“We might not have further clarity before 1 January, but this will remain an ongoing discussion point,” said Chaucer’s head of global reinsurance, Chris Baker.
As with the Baltimore loss, the market will need to determine pricing while accounting for a wide range of potential outcomes. Large reserves have already been set aside, but the final quantum remains uncertain and subject to significant variability.
Meanwhile, there is expected to be no let-up in the focus on political violence wordings and the breadth of coverage.
Given the complexity of the issue, it appears unlikely that the market will arrive at a single, standardised solution. Instead, reinsurers and insurers are continuing to work through bespoke approaches with individual clients.
“Every client buys their political violence reinsurance slightly differently. I don’t believe that a broad-brush solution really works here,” said Sompo’s Silies.
“As much as one standard wording for everyone might appear desirable, I have some doubts that approach would really do the complexity of the topic justice. Our process has been working with our clients individually to develop tailored solutions.”
The market largely moved away from composite structures at the 1 January 2023 renewals, and this separation is expected to continue.
“I think splitting out the coverage makes it more equitable and allows for more appropriate pricing for the exposures that sit within each layer,” said Aspen’s Goodwin.
Across the specialty market, reinsurers are focused on balancing discipline with competitiveness.
While uncertainty remains around several large loss events, the prevailing view is that reinsurers will adopt mechanisms to manage volatility—whether through structural adjustments, additional premiums, or more refined wordings.
“We cannot ignore the potential for a significant loss. However, we intend to deal with the uncertainty,” said Chaucer’s Baker.
“There may be structural changes to reinsurance programmes or additional premiums if costs become prohibitive,” added Goodwin.
“Ultimately, we need to offer solutions that clients can buy and that support effective risk transfer.”
As the market approaches 1 January renewals, the overarching theme is one of cautious stability.
Despite headline loss events and ongoing uncertainty, strong underwriting performance, improved pricing adequacy and an abundance of capacity are expected to support relatively orderly renewals.
The focus remains on protecting the gains achieved in recent years, particularly following the significant market correction in 2023, while continuing to meet evolving client needs.
In a market defined by both volatility and opportunity, success will depend on the ability to adapt structures, refine coverage and deliver solutions that remain relevant in an increasingly complex global risk environment.
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