Aon Benfield says the insurance cycle remains challenging and the focus on reinsurance price is preventing insurers and reinsurers from being more innovative.

The reinsurance broker argues that the focus on price, price movement and comparative market discipline “can defeat the opportunity for the market to do more with insurance partners following stressful events”.

Discussions that focus on price rather than value can erode partnerships through raised retentions and short placements, it says. Partners should be doing more to collaborate, innovate and add more value to clients.

In its latest Reinsurance Market Outlook – Value Creating Capital, Aon Benfield says reinsurers remain well capitalised and have added tremendous economic value and financial stability to catastrophe-affected insurers and regions this year.

It expects both reinsurers and insurers to end the year in a stronger capital position than at the start of the year and says reinsurance capacity is widely available.

“Every insurance market that has been stressed by recent catastrophe losses has seen orderly renewals of reinsurance capacity at pricing that, while higher, implies a cost of capital that adds value to insurers, their insureds and their shareholders.”