Demand for Australian property reinsurance continues to grow, with significant capacity remaining in the market, according to a report by Willis Re.

It says the demand has led to a softening of rates for non-loss affected programs.

Pro-rata commissions on property rates can be up to 2%, while risk loss can be up to 20% and catastrophe loss up to 5%, according to Willis Re.

In New Zealand the drop in seismic activity has led reinsurers to reconsider the market.

In Australia reinsurers’ appetite for casualty business remains strong, with plenty of capacity, the report says.

“Rates have continued to soften and buyers continue to prefer Australian Prudential Regulation Authority-approved reinsurers.”

Globally, reinsurers are defending market shares against new entrants funded by capital markets.

“Traditional reinsurers’ defensive actions include price reductions, larger line sizes and, in some cases, broadening cover by offering options such as multi-year agreements, extended-hours clauses and additional reinstatements,” Willis Re Global CEO John Cavanagh said.

“Capacity for aggregate cover is also more widely available.”

Recent losses from US tornadoes and European floods will have only a modest impact on the global reinsurance market, the report says.

“As it stands, it is not easy to see any end to the continuing softening of the global reinsurance market. With the modest outlook for growth and improvements in underwriting profitability, many reinsurers are re-examining their capital management strategies in an effort to improve their overall results.”