The war, terrorism and political violence market faces what is likely to be its first loss-making year since the class was created after the 11 September 2001 attacks, according to Marsh Re. Middle East losses are being discussed at north of US$2 billion against an annual gross premium base of approximately US$2.5 billion, the broker says in Global Specialties 2026 Market Update, published ahead of the Rendez-Vous de Septembre. The market response is selective rather than uniform. Pricing has tightened where losses are concentrated, while elsewhere the softening trend has paused rather than reversed. Demand is outpacing pricing, with submissions surging as Middle East insureds seek war-on-land cover they have not previously bought. Capacity is not retreating. Marsh Re placed a consortium in June capable of deploying up to US$47.5 million per risk in the Middle East and US$345 million globally, capacity the broker says did not exist a year earlier. It warns that clients relying solely on composite programmes risk significant net exposures across marine and energy classes once war losses erode shared limits. Aviation has held firmer than its specialty peers, though January 2026 general excess of loss pricing was largely flat to minus 5 per cent, a modest correction against premiums that have risen more than 300 per cent since 2018. Reinsurer appetite to bring aviation war back inside composite excess of loss structures is growing, a shift from the position since 2022 in which war cover has stood alone. In credit, new reinsurer interest has reached what Marsh Re calls unprecedented levels over the past two years, driven by excess capital and a desire to diversify away from catastrophe classes. Risk-adjusted excess of loss pricing fell by between 10 and 15 per cent at the January 2026 renewals, though deployment fell from 122 per cent to 120 per cent and no new entrant has been accepted as a leader or primary quoting market. Property saw average risk-adjusted rate decreases settling in the high teens, with 2026 occurrence excess of loss pricing now aligned with 2021 albeit at higher attachment points. Aggregate excess of loss has rebounded, with a 50 per cent increase in limit traded and almost 40 per cent of buyers integrating frequency protection into their strategy, up from just over a quarter two years ago. Marine, energy and technical lines face a bifurcated renewal at 1 January 2027, with outcomes differentiated by loss experience and long-term credit balance. Softening momentum has slowed as the MV Dali loss crystallised at US$2.8 billion, alongside Middle East conflict and onshore energy losses. In cyber, the market has moved away from off-the-shelf solutions, with the first property and cyber combined catastrophe protection placed this year. Marsh Re says the mean time to exploit has fallen from 745 days in 2020 to hours in 2026, and that reinsurers have made approximately US$3.4 billion on cyber quota shares between 2018 and 2025. The report also finds the Lloyd’s market has entered a softer phase, with capital deployment becoming more selective. Institutional capital from family offices, private equity, pension funds and asset managers has established what Marsh Re describes as a meaningful and likely permanent role in Lloyd’s capital structures, with London Bridge 2 continuing to support access. James Boyce, chief executive officer of global specialties at Marsh Re, says the market is pulling in several directions at once rather than moving in one, with closer collaboration and a genuine understanding of client risk having become key differentiators rather than price alone.
