Leading reinsurance broker Benfield says pricing trends in the global reinsurance market are shifting as the market approaches the January 1 renewal season.

Its study, Capital Consequences – Billion Dollar Question, says the fallout from the credit crunch and losses from Hurricane Ike are challenging the theory that reinsurance rates would continue to fall next year.

Benfield says the outlook is now for a hardening market as reinsurers absorb losses from natural catastrophes like hurricanes Gustav and Ike and the global financial crisis.

While insurers are conservative investors, the report says their net assets “will not be immune from impairment charges and falling mark-to-market values through widening spreads”.

“Losses and loss of confidence are a potent mix for changing behaviour. The onset of global recession and associated increase in cost of claims could act as a catalyst for both insurers and reinsurers alike.”