Insurance Curator Who: global reinsurers, primary insurers, policyholders and regulators; What: a surge in coverage disputes and contract friction after repeated convective‑storm events; When: concentrated across 2023–2025 and carrying into the 2026 reinsurance renewal cycle; Where: major developed insurance markets — the United States, Europe, Australia and Canada; Why: an accelerating pattern of climate‑driven secondary perils (severe convective storms, hail, tornado outbreaks and related losses) is pushing insurer profit‑and‑loss statements, prompting reinsurers to tighten terms, bolster reserves and re‑evaluate aggregate exposures. (reinsurancene.ws)
Insurers and reinsurers in advanced economies are facing a two‑front challenge: rapidly rising frequency of damaging convective storms that produce many small‑to‑medium loss events, and a spike in coverage fights as policyholders, cedents and reinsurers square off over how those losses are allocated under complex treaties. The result is faster reserve strengthening, constraints on treaty structures and, increasingly, litigation and arbitration to resolve ambiguous contract language — pressures that are being reflected in balance sheets, pricing and the January 1, 2026 reinsurance renewals. (artemis.bm)
Industry losses and the changing risk profile
Severe convective storms (SCS) — thunderstorm complexes that produce hail, straight‑line winds and tornadoes — have been a leading and growing source of insured loss. The Swiss Re Institute and other industry analysts have identified secondary perils such as SCS and wildfires as the dominant drivers of recent elevated insured losses globally, with SCS contributing material shares of total nat‑cat costs in 2023–2025. Swiss Re and independent commentators reported that secondary perils accounted for much of the jump in insured losses in 2024 and 2025, with severe convective‑storm events cited as among the costliest drivers in those years. (reinsurancene.ws)
“The pattern of secondary perils making up a larger share of annual insured losses is persistent,” Swiss Re analysts said in public commentary summarizing the trend of rising SCS impacts and the growing protection gap. That trend has produced multi‑year volatility in P&C results and has altered how both primary carriers and reinsurers think about portfolio accumulation and aggregation. (reinsurancene.ws)
Market reaction: reserve builds, higher attachments and constrained coverage
Reinsurers responded to the multi‑year run of volatile weather losses in a mixture of financial and contractual measures. Large reinsurers reported adding to reserves and recalibrating capital plans: several European reinsurers used favorable results in some periods to strengthen buffers and set aside additional reserves for U.S. liability and catastrophe exposures. At the same time, reinsurers have moved to restrict their participation in the lower, frequently‑hit layers of catastrophe programs — the layers that absorb repeated secondary‑peril losses — and to raise attachment points on aggregate covers or limit reinstatements. Industry commentary and results reporting show a persistent trend toward higher attachments, narrower aggregate covers for weather‑driven secondary perils and an increased use of retrocession and capital‑markets solutions to manage peak accumulation. (beinsure.com)
Munich Re executives emphasized the need for strong reinsurance partners and updated risk models, saying clients can rely on long‑term capacities but that reinsurers must adapt to “changes in hazard patterns and claims development” as climate change alters loss frequency and severity. Munich Re management also highlighted robust capital tests and said the company would maintain solvency margins, while continuing to adjust underwriting scope. (insurancebusinessmag.com)
Jan. 1, 2026 renewals: softer pricing but tighter terms
Broker and market commentary showed a complex picture at the January 1, 2026 renewals. Pricing for some property‑catastrophe layers softened relative to hard markets of recent years — a function of accumulated reinsurance capital entering the market — yet underwriters exercised selectivity in the perils and accounts they would accept. Market reports described modest rate easing for loss‑free accounts but clear tightening of terms where exposure to frequent secondary perils exists, and noted reinsurers’ willingness to reduce aggregate limits and lower capacity for lower attachment layers that historically shoulder repeated SCS losses. (beinsure.com)
Analysts said the softness in headline reinsurance rates masks structural change: reinsurers are prepared to write more business where priced appropriately or for remote layers, but are reducing their appetite for broad, low‑attaching covers that would repeatedly pay out for serial convective events. “Global reinsurance pricing fell more than expected at Jan. 1, 2026 renewals, with abundant capital, weak catastrophe support, and easing terms,” one market summary reported, while cautioning that reinsurers are increasingly selective on accumulated secondary peril exposures. (beinsure.com)
Coverage disputes proliferate — from policyholders to reinsurers
The surge in event frequency and the concentration of many smaller losses in a short period has produced an uptick in coverage disputes at multiple levels: insureds vs. primary carriers, primary insurers vs. reinsurers on allocation and aggregation issues, and reinsurer‑cedent friction over reinstatement and follow‑the‑settlements clauses.
In highly exposed U.S. markets, regulators and market supervisors reported large volumes of filed claims and high closure rates for claims that ultimately did not result in payment because damage fell under non‑covered perils (for example, surface water vs. wind, or flood exclusions). Florida’s regulatory data, cited by industry commentators, showed hundreds of thousands of claims across recent hurricane seasons and related severe weather events, with a significant portion closed without payment because the damage did not fit homeowners policy triggers or was below deductible thresholds. Public reporting of those figures has fed a broader narrative of consumers squeezed by narrower interpretations of coverage and a rising incidence of contested denials. (toppodcast.com)
Legal and arbitration fights have followed. In major commercial disputes the courts and arbitration panels are being asked to construe aggregation language, hours‑clauses, non‑damage business interruption wording and reinsurance “follow‑the‑settlements” provisions — technical contract points that determine whether losses arising out of a sequence of related storms count as a single event or multiple events for attachment and limit purposes. London and U.S. jurisdictions have seen several test cases over aggregation and the unit of loss, and reinsurance litigation specialists say such disputes are more likely as secondary‑peril loss patterns persist. (brj-uat2.hosted.positive.co.uk)
“Disagreements over aggregation and allocation are inevitable when you get serial events that can be argued as one continuous peril or as separate occurrences,” said a reinsurance lawyer explaining why disputes escalate from the claims desk to arbitration panels. “When tens of thousands of homeowner claims are filed over a series of intense convective outbreaks, it becomes commercially and legally vital to establish how the treaty language governs accumulation and reinstatements.” (schifferlc.com)
Drivers of the disputes: ambiguity, accumulation and social dynamics
A cluster of technical and market factors is driving the spike in disputes:
-
Policy and treaty wording ambiguity. Standardized language was not originally drafted for the current pattern of serial, geographically dispersed convective events. Ambiguities in aggregation, hours clauses and reinstatement provisions are being litigated and arbitrated. (brj-uat2.hosted.positive.co.uk)
-
Accumulation risk. Serial convective events concentrate many smaller claims into short periods, inflating both gross and net accumulation on cedents’ balance sheets and triggering treaty features that are contested between cedent and reinsurer (for example, whether multiple landfalls or outbreaks count as one catastrophe). (artemis.bm)
-
Claims handling and backlogs. Rapid claim surges put pressure on adjusters and lead to higher rates of initial denials and later disputes. Regulators report that many closed claims reflect coverage mismatches (such as flood vs. wind) rather than bad faith denials, but the volume increases the odds of formal complaints and lawsuits. (toppodcast.com)
-
Litigation dynamics and social inflation. Broader trends in U.S. litigation, including higher frequency of representation by plaintiff attorneys early in claims and rising jury awards in some lines, add to the cost pressure that incentivizes aggressive coverage positions. Legal analysts say this “social inflation” effect compounds the P&L impact of repeated secondary perils. (jdsupra.com)
Reinsurers’ capital and product responses
Faced with the twin pressures of frequency‑driven loss and contract friction, reinsurers have adopted multi‑pronged strategies:
-
Reserves and capital buffers. Major reinsurers reported strengthening reserves and recalibrating capital plans to protect return on equity and solvency ratios. Industry reporting noted reserve builds for U.S. liability and catastrophe lines across several companies. Managements have emphasized solvency testing and the strategic use of buybacks or dividends only after capital adequacy is satisfied. (beinsure.com)
-
Contract design and underwriting discipline. Reinsurers are increasing attachment points on property catastrophe treaties, limiting reinstatements, narrowing aggregation language and, in some cases, reducing capacity in the lower layers of catastrophe programs that would bear frequent SCS losses. These changes leave cedents to retain more volatility in their own P&L or seek alternative retrocession. (beinsure.com)
-
Alternative capital and ILS. The market has seen continued issuance of catastrophe bonds and the use of insurance‑linked securities to spread risk to capital markets. Reinsurers and cedents are also experimenting with parametric protection for certain convective exposures — coverage that pays on an index (wind speed, hail size) rather than on measured physical damage — to avoid protracted disputes over underlying losses. (beinsure.com)
-
Model updates and analytics. Firms are rapidly updating catastrophe models to better capture convective hazard patterns, hail vulnerability and exposure accumulation in growing housing stock. That modelling underpins reinsurance pricing and capacity decisions and is now a commercial differentiator for brokers and reinsurers. (insurancebusinessmag.com)
Quotes from the market
“Most of the global insured losses were driven by secondary perils, in particular SCS,” Swiss Re Institute analysts said in published commentary on recent sigma findings, noting the multi‑year trend that has pushed reinsurers and insurers to re‑examine pricing and product scope. (reinsurancene.ws)
Munich Re board members framed the problem in capital and underwriting terms. “Our clients can rely on long‑term capacities,” Munich Re said, adding its view that updated modelling and stronger reinsurance partners are essential as the hazard landscape evolves. Munich Re executives also underscored the need to maintain solvency corridors while adapting modelled assumptions to recent meteorological developments. (insurancebusinessmag.com)
Consumer and regulator responses
Policyholders in developed markets have become more vocal, and regulators have increased scrutiny of claims handling and solvency. Florida’s Insurance Office, for example, reported heavy claim volumes and noted a substantial share of claims that closed without indemnity because the damage was excluded or below deductible thresholds — a dynamic that has led to political and regulatory attention on policy wording and insurer practices. Regulators in several states and countries have also signalled increased monitoring of insurer reserving and consumer complaint data as the pattern of serial events persists. (toppodcast.com)
Legal expertise and market counsel say better disclosure and clearer contract drafting will be critical in reducing the volume of disputes. Some jurisdictions are also exploring litigation‑data standards and improved reporting to identify bad actors and systemic gaps in coverage practice. (jdsupra.com)
Profit‑and‑loss pressure on primary insurers
For primary insurers, the combined effect of higher loss frequency, elevated claims handling costs and restricted reinsurance protection compresses underwriting margins. In some mature markets insurers have absorbed repeated weather losses at the same time as facing inflationary repair costs and supply‑chain friction that increase claim severities. The consequence for many carriers has been sustained margin pressure and, in some cases, strategic market exits or repricing in high‑exposure territories. Reinsurer discipline and higher attachment points transfer more tail risk to cedents’ P&L and, ultimately, to policyholders through higher premiums, reduced coverage or both. (beinsure.com)
What cedents and policyholders are doing
Insurers are responding with a mixture of demand‑side and supply‑side adjustments:
- Buying more parametric or layered covers where available and affordable.
- Reinsurers and brokers are negotiating treaty wordings that explicitly address aggregation and series events to reduce ambiguity.
- Primary carriers are raising deductibles, limiting cover in high‑frequency layers, and shifting to higher retention strategies in order to stabilize long‑term pricing for consumers.
- Some insurers and governments are engaging in public‑private initiatives to reduce the protection gap via resilience investments, building codes and risk‑informed planning. (beinsure.com)
Outlook and implications
Industry analysts project that as long as serial convective activity remains elevated, the market will operate under a new set of constraints: somewhat softer headline pricing where capacity is ample, but materially stricter contract terms and lower aggregate limits for exposures vulnerable to frequent secondary perils. The net effect for developed markets is likely to be continued upward pressure on retail prices and reduced scope of standard cover for certain peril combinations unless policy language and public policy evolve to manage and finance residual risk. (beinsure.com)
“The insurance system must evolve,” Swiss Re economists wrote in summary remarks on recent loss trends. “Strengthening prevention, protection and preparedness is essential to protect lives and property. Reinsurers and the broader insurance sector have a dual role: acting as financial shock absorbers and supporting the development of resilient, risk‑informed public policy and private investment that reduce future losses.” (swissre.com)
As the industry grapples with litigation, treaty re‑drafting and capital management, the practical consequences for customers — narrower cover, higher retention and more frequent disputes — will be the measures by which the market’s adaptation is judged. Regulators, courts and markets will play key roles in defining the borderline between commercial risk transfer and uninsurable accumulation that must be borne by governments or capital markets. (brj-uat2.hosted.positive.co.uk)
— End of article —