For many retail insurance agents, reinsurance might seem like something only carriers need to worry about. But in today’s hard market, rising reinsurance costs are a major driver of increasing premiums—and that impacts both agents and their clients. As we move through 2025, understanding reinsurance trends is becoming essential, especially for agents serving commercial customers.
Reinsurance is a financial tool insurers use to manage risk. It allows them to transfer some of their financial exposure to another company — the reinsurer — usually in exchange for a negotiated premium. This helps carriers cover large or unexpected losses and remain solvent during catastrophic events.
When reinsurers raise their prices or limit their coverage, primary carriers often pass those costs along to policyholders. For commercial clients with high-value policies, this can mean significant premium hikes. That’s why agents who understand reinsurance market trends are better equipped to explain rate increases and help clients make informed decisions.
Over the past few years, the reinsurance market has shifted from a buyer’s market to a seller’s market. Leading into 2023, a combination of global challenges — including the COVID-19 pandemic, natural disasters, inflation, and legal system abuse — led to higher losses for reinsurers. As a result, many reinsurers reduced their risk appetite and increased rates, particularly for property catastrophe coverage.
These conditions drove up reinsurance costs during the 2023 renewal cycle and continued into 2024. Although rate increases have somewhat leveled off, underlying challenges remain. Reinsurers are still focused on improving profitability, and many market pressures are ongoing. For insurance agents and their clients, that means current reinsurance rates—and the higher premiums they influence—are likely here to stay.
Agents play a critical role in helping clients understand how reinsurance affects pricing. According to a recent Agent-Customer Connection Study, 62% of policyholders want their agents to explain market trends and provide early notice of major premium changes.
Keeping clients informed about reinsurance dynamics builds stronger relationships and ensures fewer surprises when renewal time comes around.
AAI believes in setting up all our agents for success! Our executive staff is happy to assist you in figuring out the best solutions for your clients. They are available to answer any concerns you may have and aid in establishing your organization as a viable enterprise. Your knowledge will be kept up-to-date, and you will receive the direction and instruction necessary to build a thriving clientele and career as an agent. Contact us today to discuss how.