There is a question moving through boardrooms across the North American insurance market at present, and it is rarely asked directly. It usually arrives disguised as a question about track record, or about how a candidate handled a particular year in a particular book. What sits underneath it is simpler, and much harder to answer: has this person led through a market moving against them?
For most of the last six years, that question did not need asking. Rate was doing a significant amount of the work. It is not doing that work anymore.
Global commercial insurance rates fell 6% in the second quarter of 2026, the eighth consecutive quarterly decline, according to Marsh's Global Insurance Market Index. Property rates fell 12% globally, with double-digit decreases in five regions including the US at 13%. Pricing peaked at a 22% increase in late 2020, which means the market is now unwinding one of the hardest rate cycles in a generation.
The reinsurance picture is starker. Gallagher Re reported that property catastrophe rates fell by 20% to 25% or more for the best performing North American accounts at the July 1 renewals. The Guy Carpenter Global Property Catastrophe Rate-On-Line Index is down 16% across 2026 renewals, the steepest annual decline since the late 1990s.
The market changed in roughly eighteen months. Leadership benches did not.
What "Cycle-Tested" Actually Means
The phrase gets used loosely, and it is worth being precise, because boards are increasingly asking for something they cannot easily define.
Cycle-tested is not the same as long-tenured. Plenty of executives have thirty years in the industry and have never personally owned a decision to shrink. What the term should mean is narrower: a leader who has given up premium on purpose, defended that decision internally when the numbers looked bad, and been proven right two years later.
That behaviour is difficult to observe from outside, because the decisions that matter most rarely appear in a press release. The conditions creating the pressure, however, are well documented. Marsh's second quarter data notes that insurers are increasingly competing on broader coverage, expanded policy terms and lower deductibles rather than on price alone, with higher limits and reduced retentions frequently available.
That shift matters more than the headline rate numbers, and it is where the leadership question actually bites. When competition moves from price into terms and conditions, the cost of a discipline decision becomes far less visible. A leader who declines business on rate can point to a number. A leader who declines business because the attachment point has moved, or the wording has loosened, is defending a judgement rather than a calculation, and usually to a board watching competitors write the risk.
Margins are narrowing across the market at the same time. Gallagher Re estimates reinsurer return on equity at 14% to 15% for 2026, down from close to 19% in 2025, still comfortably above cost of capital, but a clear step down from the peak.
Deliberately shrinking a book is the hardest thing to ask of a leader who has never had to do it, and the easiest thing to punish in a quarterly review. Boards are looking for people who can hold that position and explain it convincingly to a room that would rather hear about growth.
The Reserve Question Has Returned, and It Is a Leadership Question
Reserving is often treated as an actuarial matter. It is a governance and culture matter, and boards are now treating it that way.
Milliman's analysis of 2024 statutory filings found that US carriers reported $7.8 billion in adverse prior-year development across all liability lines, more than double the $3.7 billion reported in 2023, and following seventeen consecutive years of favourable aggregate development. For casualty lines specifically, adverse development reached $15.8 billion, the highest level on record for those segments.
The pressure behind those numbers has not eased. Marathon Strategies recorded 135 nuclear verdicts against corporations in 2024, a 52% increase on the prior year, totalling $31.3 billion. Verdicts above $100 million rose to a record 49 cases.
And the cushion that has masked much of this is thinning. Fitch expects a combined ratio of 96% to 97% for 2026, up from approximately 94% in 2025, reflecting a more normalised hurricane season and lower favourable reserve development.
The leadership implication is uncomfortable but straightforward. The last five years allowed a number of teams to release redundancy from strong short-tail vintages while deficiency built quietly underneath in long-tail casualty. Boards now want CFOs, Chief Actuaries and CUOs who will surface a problem in the quarter they find it rather than waiting for it to resolve itself. That is an assessment of character as much as technical capability, and it is far harder to test for.
This Is a Bifurcated Market, and It Requires Two Instincts at Once
The most common error in current market commentary is treating this as a straightforward soft market. It is not.
Marsh's second quarter data shows casualty rates rising 2% globally, with every region declining except the US, where casualty rates increased 7%. US-exposed risks continued to face heightened underwriting scrutiny, with capacity available but increasingly selective. Casualty reinsurance renewals held broadly stable rather than soft, with US commercial auto notably more difficult and loss-affected excess of loss layers up 10% to 15%. Cyber told a different story again, with excess of loss placements down 35% or more in North America and ceding commissions on proportional business reaching a record 34.5%.
A group Chief Underwriting Officer therefore needs to be defensive in property, assertive on rate in US casualty, and disciplined in a cyber market where competition has moved fastest of all. Three postures, one leadership team, at the same time. Leaders who only know how to operate in one mode are the visible risk on any board's succession map.
There is also useful perspective in the numbers. Even after the 16% fall, the global property catastrophe rate-on-line index still sits almost 32% above where it bottomed during the last soft market in 2017. The market is softening quickly, but from a high base. The question is not whether returns disappear. It is whether leadership teams recognise where the floor sits before they reach it.
The Experience Gap Nobody Is Discussing
Work backwards from the Marsh data and the implication becomes clear. An eighth consecutive quarterly decline in Q2 2026 means rate reductions began in the third quarter of 2024. Before that, the market had been rising or holding since around 2018.
Which means an executive who stepped into their first P&L, or their first genuine C-suite seat, at any point after 2018 has never priced, reserved or planned through a sustained down cycle.
That captures a substantial portion of the current leadership population, and boardroom turnover has widened it further. PwC's Governance Insights Center notes that CEO turnover increased across S&P 500 companies in 2025, driven by a combination of strategic realignment and intensified activist investor pressure, with succession rates across the broader Russell 3000 holding steady at 11%. Each of those transitions places a leader into a seat they have not held before, at precisely the point in the cycle where prior experience matters most.
The honest counterpoint matters here. Cycle experience is not the only qualification worth having, and a leader carrying 2008 scar tissue but no data fluency is not the answer either. As we set out in our recent piece on AI-ready leadership, the profile the market rewards combines both. What has changed is that cycle-tested judgement has moved from a desirable trait to a screening criterion.
What Boards Should Be Testing For
Four questions we would encourage any board or CHRO to build into both external search and internal succession assessment.
The walk-away test. Ask for a specific decision where the candidate gave up premium. Not a philosophy, but a number, a date, and what happened afterwards.
The reserve conversation test. Ask how they have handled a reserve review that produced an answer nobody wanted to hear. Listen for whether they escalated early or managed the timing.
The expense test. Rate is no longer carrying the combined ratio, which puts operational execution back at the centre. Ask what they have actually taken out of a business, not what they planned to.
The retention test. Softening markets move people. Ask who followed them into their last role, and who they lost.
These questions work equally well on internal candidates, which matters given how many organisations will be promoting from a bench that has only ever operated in favourable conditions.
For Candidates, the Market Is Asking Something Different
The 2019 to 2024 growth story is no longer a differentiator, because nearly everyone has one. Premium expansion during a hard market tells a board very little about judgement.
What does differentiate is evidence of a decision that cost something in the short term and was vindicated later. Candidates who can articulate that clearly will outperform candidates with stronger headline growth figures, particularly as consolidation narrows the number of senior seats available. PwC's midyear insurance deals outlook recorded $29.6 billion in announced deal value across 191 disclosed transactions in the first half of 2026, with specialty carriers, MGAs and E&S businesses driving deal flow as organic growth becomes harder to find.
Boards Are Not Hiring for This Market
The most useful forward signal available comes from Howden Re. Its 1 June renewal analysis found that reinsurer economic value-added, return on invested capital less cost of capital, has compressed materially through 2026, and that a further decline of the magnitude seen at 1 June would bring large segments of industry returns below their cost of capital by 2027.
That is the environment the next generation of leadership appointments will actually operate in. Not the market boards are recruiting into today, but the one arriving in roughly eighteen months.
The organisations that recognise this are already changing how they assess. They are asking harder questions about what candidates have declined rather than what they have won, and they are building cycle experience into succession planning rather than hoping it emerges when needed.
The alternative is finding out how a leadership team performs in a down cycle at the same time as the market does.
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Eliot Partnership is the only global executive search firm dedicated exclusively to the insurance and reinsurance industry. We work with the world's leading insurers, reinsurers, brokers, and specialty platforms to build leadership teams equipped for what's next. To speak with our team about leadership hiring, succession planning, or executive search, visit eliotpartnership.com.
