Reinsurers and the entire property and casualty industry must evolve as new capital reshapes the market, a Casualty Actuarial Society (CAS) seminar in New York has heard.

Alternative capital, such as hedge funds and pensions, is driving reinsurance prices lower and there are signs it will seep into other areas of insurance.

But analysts who attended the CAS event last month have differing views on how best to react.

Assured Research MD Alan Zimmermann and AM Best Senior VP of Rating Services Matthew Mosher believe the industry needs to move on to new opportunities.

“If you are not willing to change with society, you are going to lose your relevance,” Mr Mosher said.

Keefe, Bruyette & Woods MD Meyer Shields backs a more modest approach, such as probing for profitable niches.

The seminar heard Hurricane Andrew, which hit Miami in 1992, instigated the transformation. It caused insured losses of $US23 billion ($24.4 billion), shook the industry and brought computer modelling to the fore.

Models have made catastrophe risk easier to understand and price, meaning the dominance of reinsurers has ebbed.

The analysts agree reinsurers have responded well to short-term challenges by writing less business as new capital pushes down prices. Some reinsurers write risks then cede them to the capital markets at a lower price.

But Mr Zimmermann says that in the long term, reinsurers have responded slowly and are trying to insure an industrialised America “that is approaching non-existence”.