Reinsurance rates slumped at the June and July renewals, and weak market conditions may persist into next year, according to Willis Re.

Property catastrophe loss-free rates fell 15-25% in Florida and 10-20% in the US nationwide. Florida reinsurance rates influence global rates because the state is heavily exposed to risks from North Atlantic hurricanes.

Rates dropped 15-20% in the UK and 12.5-17.5% in Australia on a risk-adjusted basis, according to the broker’s First View report.

“Continued benign loss activity during the first half of [this year] has compounded the market softening, while inflows from capital markets continue to add capacity,” an introduction to the report by Willis Re Chairman Peter Hearn and CEO John Cavanagh says.

Non-traditional capital is also spilling into non-catastrophe lines, as more fund-backed reinsurers enter the market.

“Looking forward to next year, the current soft market poses an increasing challenge for most reinsurers,” the report says.

Primary insurers are also coming under pressure, with rate reductions arising in most territories.

“The tentacles of the softening market are spreading far and wide, with no immediate signs of relief,” the report says.

US casualty reinsurance fell 10-20% for motor liability and 15-20% for professional liability, while in Australia professional lines dropped 5-7.5% and casualty fell 2-5%.

Australian property rates were driven by abundant capacity and supply, as traditional reinsurers look to maintain market position.

Overall demand also fell “to some degree”, while price reductions varied according to factors including loss experience, Willis Re says.

Reinsurers are willing to lock in capacity early and are looking to package across multiple programs, while multi-year transactions are emerging.

In the US the weak market is affecting terms and conditions as well as price. Some buyers are increasing reinsurance to manage exposure growth, while others are keeping the savings.

US property catastrophe renewals fell by up to 20% but drops were more muted on accounts affected by events such as Superstorm Sandy, tornadoes and hail.

Despite catastrophe bond issuance growth, there are signs new investment is slowing and may be approaching “dynamic equilibrium”, Willis Re says.