Reinsurance Got Cheaper for a Second Year Running. Jamaica Bought Its Biggest-Ever Catastrophe Bond While the Discount Lasted.

What "Reinsurance Got Cheaper" Actually Means

Dan Hofmeister, an associate director at AM Best, put the pattern plainly ahead of this year's Rendez-Vous: "You have two years in a row now where there's been double-digit decreases." His question was whether that streak survives a third year. "I think it's hard to imagine another third year double-digit decrease and it not be close at least to that breaking point," he said, pointing to how much capital reinsurers are now sitting on. "They just made so much money that at some point you have to find a place to deploy it just to make adequate returns on your capital."

The capital figures back him up. Bermuda-based reinsurers, members of the Association of Bermuda Insurers and Reinsurers, grew their collective equity 16.6% to $207.7 billion over the period, even as gross premiums rose a comparatively modest 4.6% to $197.5 billion. Net income climbed 22.4% to $32.8 billion and investment income surged 34.8% to $23.4 billion. That combination, record capital paired with restrained premium growth, is exactly the setup that pushes pricing down: reinsurers with more capital than they can deploy at existing rates compete harder for the business that is out there.

Mike Van Slooten, head of market analysis at Aon Reinsurance Solutions, expects the trend to continue into the January 2027 renewal, though not at the same pace. Reinsurers, he said, "are very mindful about trying to maintain margins, trying to deliver the type of returns that investors have become used to over the last three to four years," and he does not expect them "just to roll over" on price. Hofmeister agreed the industry's discipline will be tested at the January 1 renewal specifically: "we'll see how much their rhetoric actually holds to their actions."

Bermuda's reinsurers matter to this story well beyond their own island. Bermuda writes a large share of the world's property catastrophe reinsurance, including the treaties that price the wind and named-storm cover Caribbean insurers and facilities like CCRIF SPC buy every year. When Bermuda-based capital gets cheaper to deploy, it is Bermuda's pricing, not any single Caribbean insurer's balance sheet, that moves first.

Jamaica's $200 Million Bond, Priced Into the Discount

The clearest evidence that this softer market reached an actual Caribbean transaction sits in Kingston, not Bermuda. On May 18, 2026, the World Bank priced a $200 million catastrophe bond on behalf of the Government of Jamaica, settling the deal on May 26. It is Jamaica's third catastrophe bond, after its first in 2021 and a second in 2024, and its largest to date. It replaces the $150 million 2024 bond, which paid out in full after Hurricane Melissa struck the island as a Category 5 storm on October 28, 2025.

The new notes, issued under the World Bank's Capital At Risk program as CAR 137, run to a maturity date of May 23, 2030, covering four full Atlantic hurricane seasons. They carry a parametric, per-occurrence trigger for named storms, meaning payment depends on a storm's measured wind speed and track against Jamaica rather than on a claims adjuster's assessment after the fact, the same mechanism that let the 2024 bond and CCRIF's parametric policies both pay out within weeks of Melissa. The coupon is set at compounded SOFR plus a 0.12% funding margin and a 6.75% risk margin, with an initial expected loss of 2.48%.

Investor appetite tells its own part of the story. Twenty-five global investors bought into the 2026 bond, up from fifteen in 2024, split roughly 69% dedicated insurance-linked securities funds, 25% other asset managers, and 6% insurance and reinsurance companies. Jamaica's finance minister, Fayval Williams, called the outcome a sign of the World Bank's "market guidance and placement of the catastrophe bond across a wide cross-section of global investors," while World Bank Treasurer Jorge Familiar pointed to the 2024 bond's payout after Melissa as proof of concept: "the payout following Hurricane Melissa demonstrated how countries can prepare for disaster."

Put the pieces together and the read is straightforward. A government that had just watched its previous catastrophe bond get fully exhausted by a record storm went back to the same capital markets seven months later, asked for more coverage than before, offered pricing shaped by a softening reinsurance cycle, and found more investors willing to take the other side of the bet than it had in 2024. That is what a genuine discount looks like when a sovereign borrower is the one buying it.

The Numbers Behind the Softer Market

Jamaica's bond is not an isolated data point. CCRIF SPC, the parametric risk pool that 22 Caribbean and Central American governments and utilities pay into, grew its total coverage limits 9% to $1.57 billion for the current policy year, up from $1.44 billion the year before, a 70% increase in coverage across its Caribbean portfolio and an 80% increase across Central America. New members joined the electric utility side of the pool too, including Jamaica Public Service Company and the Nevis Electricity Company Limited, broadening the base of premium the facility collects even as its per-unit pricing softened.

AM Best's own market segment report on Caribbean insurers, published in February 2026, described the same shift from the private commercial side. Reinsurance costs and capacity constraints, the report found, have moderated for Caribbean insurers, with property reinsurance pricing accelerating its softening trend and a modest relaxation in some terms and conditions. That eased cost pressure showed up in results: insurance service revenue across the insurers AM Best tracks rose 12.0% to $2.7 billion in 2024, and net insurance service revenue rose 11.3% to roughly $1.4 billion.

The same report was careful not to call the underlying risk any less dangerous. Storm activity, it noted, remains a volatile and destabilising factor for the region's insurers, and single-island insurers carrying too much concentrated property exposure face the sharpest downside if the next major storm lands on their own book rather than a neighbour's. Cheaper reinsurance changes what it costs an insurer to lay off that risk. It does not change how much risk sits on a small Caribbean island to begin with.

Why It Isn't Automatically Your Premium

Reinsurance is a wholesale product. An insurer buys it to protect its own balance sheet against a bad year, the way a homeowner buys a policy to protect a house. What an insurer charges a policyholder afterward is a separate, retail-level decision, shaped by reinsurance costs but also by claims experience, capital targets, and how much competitive pressure the insurer feels from rivals chasing the same customers. A cheaper wholesale bill does not obligate an insurer to cut its retail price. It simply gives the insurer more room to choose whether to.

AM Best's own report gives a reason to expect that room gets used to rebuild margin first. Over the two years before this softening began, Caribbean insurers had raised rates, particularly in motor and property, specifically to catch up with rising reinsurance costs and repair-cost inflation. An insurer that spent two years explaining a rate increase by pointing at its own reinsurance bill has little incentive to reverse that increase the moment the bill falls, especially with a storm as costly as Melissa still working through claims reserves across the industry.

Jamaica's National Housing Trust offers the clearest real example available of what "holding the line" looks like in practice, and it cuts in a useful, if limited, direction. For the policy year running from September 1, 2026 to August 31, 2027, the Trust held peril insurance premiums unchanged for its non-strata mortgagors despite Melissa. "Your peril insurance premiums will remain the same despite the massive hurricane that hit our island last year," said Leighton Taylor, manager of the Trust's Loan Portfolio Management Unit, when the decision was announced in August 2026. The Trust went further than a freeze: it also raised the sum insured on affected properties to reflect current construction costs, directly addressing the kind of underinsurance gap that left roughly 70% of one insurer's Melissa claims short of a full rebuild.

Separately, and on top of that annual freeze, the Trust waived approximately $585 million in peril insurance premiums that would otherwise have been due from about 36,000 mortgagors in the parishes hit hardest by Melissa, covering the Special Hurricane Melissa Moratorium that ran from November 2025 to April 2026. That waiver came on top of roughly $1.12 billion in interest charges the Trust had already absorbed under the same moratorium.

What to Watch Before the January Renewal

Three dates matter more than any headline about falling reinsurance rates. The first is January 1, 2027, when most of the region's reinsurance treaties actually renew; Artemis.bm and Reinsurance News both track those outcomes as they land, and whether Hofmeister's "breaking point" arrives or the softening runs a third year will only be answered there, not at Monte Carlo itself. The second is CCRIF SPC's own mid-year renewal, typically finalised by June, when the facility will confirm whether its $1.57 billion coverage limit grows again or holds. The third is your own policy's renewal date, whenever that falls, which is the only one of the three you can act on directly.

At that renewal, ask a specific question rather than accepting a headline premium at face value: did the sum insured, the named-storm deductible, or any sub-limit change alongside the total premium, and if the premium rose, why, given that wholesale reinsurance costs have fallen for two straight years. Groups tracking the intersection of AI and Caribbean risk, including StarApple AI, the Caribbean's first AI company, founded by Adrian Dunkley in Kingston in 2023, have argued that the same catastrophe-modelling tools now being credited with days of advance warning on storms like Melissa are exactly the kind of independent check a regulator, broker, or policyholder needs to hold an insurer's reinsurance-cost explanation to account, rather than taking a renewal letter's stated reason at face value. Dunkley, who also chairs the Caribbean AI Risk Management Council, has made the same point publicly: the region does not lack the data to verify a reinsurance-cost story. It has mostly lacked anyone asking to see it.

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