Market softening continued during the June-July reinsurance renewal period, but at a slower pace, according to Willis Re’s latest report.

Global CEO John Cavanagh says despite a continued lack of catastrophe losses and abundant capacity, it is “increasingly apparent” the magnitude of rate reductions is slowing.

Some reinsurers are withdrawing capacity where pricing is deemed inadequate, although there is considerable variation by class and territory.

“As yet, any indication of widespread pricing stabilisation remains elusive,” the report says.

So far this year the Fort McMurray fire in Canada is the only event that will result in “meaningful catastrophe claims” for reinsurers.

“Relief that market pricing in some areas may be nearing the bottom of the cycle is counter-balanced by concern over how and when reinsurance rates might start to increase, even modestly, on a wider basis,” Mr Cavanagh said.

“The alternative is a market that faces a number of years bumping along at current levels earning very modest returns.”

Mr Cavanagh says the UK’s decision to leave the EU is something the industry will monitor closely, but he sees no material risk to clients in the immediate future.

The industry is becoming “acutely aware” of the profound change fintechs will drive in primary insurance markets, and “far-sighted reinsurers are also seriously considering the new opportunities fintech may provide for their own activities”, the report says.

In Australia market softening continues in property markets, with plentiful capacity still available from traditional sources and insurance-linked securities, Willis Re says.

However, some reinsurers are walking away from poorly rated business.

Continued softening has occurred across most lines of Australian casualty business, with some buyers prepared to sever long-term relationships if optimum conditions are not realised.