This content is copyright to www.artemis.bm and should not appear anywhere else, or an infringement has occurred.
Abundant insurance and reinsurance capital means carriers and brokers can pursue “bold, client focused solutions” with both parties finding the current environment “energizing”, according to broker Willis (WTW).
In fact, Willis calls the infusion of capital into global insurance and reinsurance markets equally powerful as the transformation being driven by the adoption of artificial intelligence (AI).
In the latest edition of Willis’ (WTW’s) Marketplace Realities report, the broker explains that “the commercial insurance industry finds itself at a unique and promising inflection point.”
While the report focuses on the commercial insurance market, a lot of the insights from Willis read-across to what is being seen in the reinsurance sector as well and as ever risk capital is a key driver of conditions.
Not only are buyers conditions returning, but the abundance of capital is now delivering an environment where innovation can be harnessed as well, the broker believes.
“With capital abundant, technological advancements accelerating and risk insight tools more powerful than ever, the industry is poised for progress,” Willis’ report states.
Artificial intelligence (AI) sits at the heart of the transformation, not just in unlocking new insights and software tools, but also with new insurance products being tailored to meet the needs of an AI-powered digital world, the report explains.
Willis continues to explain that, “Equally powerful is the infusion of capital into the market. With industry surplus surpassing $1 trillion and reinsurance capital exceeding $725 billion, there is a strong appetite for innovation.
“This capital abundance is not just stabilizing — it’s energizing. It allows carriers and brokers alike to pursue bold, client-focused solutions.”
Strategic innovation and smart capital can unlock a world of opportunity for brokers, carriers and insurance buyers, Willis says, while the soft market environment creates a “rare window of opportunity” for buyers to expand or enhance their coverage.
The broker is realistic though, in noting that this window of opportunity may not last and conditions can shift rapidly, given the volatile world and chance of major losses that drain capital from the sector.
But for now there is this time where buyers can be strategic and opportunistic, which is evident in the property market where Willis predicts rates could be down as much as 20% for catastrophe exposed accounts.
Conditions in the treaty reinsurance market and the occurrence of losses, such as through the rest of the Atlantic hurricane season, are seen as key to outcomes at this time.
The broker explains, “The treaty reinsurance market remains pivotal. Despite major 2024 catastrophe losses, risk-adjusted rates in 2025 softened further, prompting primary insurers to expand coverage. Increased capital from the ILS/CAT bond market heightened competition, boosting direct property capacity expected by Q3 2025. Retail insurers, however, largely failed to secure lower attachment points, increasing exposure outside industry-wide events. These favorable 2025 renewals follow a stabilizing 2024 market — marked by flat to modest rate increases and steady attachments — in sharp contrast to 2023’s tighter capacity and steep rate hikes.”
Another area for property protection buyers to explore is parametrics, Willis explains, as complements to their traditional placements.
In the middle-market, “Parametric insurance solutions are gaining traction as a way to address binary risk triggers and expedite claims settlement, especially for secondary perils like floods and wildfires,” Willis explains.
Capacity continues to increase for parametric catastrophe and weather insurance solutions, with interest growing for non-peak perils at this time.
At the same time innovation in data and index construction is also helping to expand the range of parametric opportunities available to buyers.
While efficient fronted solutions and capital market led parametric programs are seen as an additional area of opportunity, especially for larger insureds.
It’s clear from the report that Willis (WTW) believes reinsurance softening is likely to persist, absent loss activity that dents capital levels, or some other kind of capital draining event.
While the innovation being seen, including in AI, is only likely to accelerate and drive greater efficiency through the market and more options for buyers, meaning the opportunity to make coverage more extensive and robust is likely to persist for insureds.
Capital abundance “energizing” for carriers and brokers. AI is transformational: Willis was published by: www.Artemis.bm
Our catastrophe bond deal directory
Sign up for our free weekly email newsletter here.