Most lines of casualty reinsurance business in Australia continue to soften, and buyers and reinsurers are increasingly prepared to disengage if parties can’t reach mutually beneficial terms, according to a Willis Re report on the crucial January 1 renewal season.

In property, rates also continue to soften, with reductions dependent on perceived program price adequacy and level of first-event retentions.

Willis Re says some reinsurers in property lines are starting to reduce capacity where rates are perceived to be inadequate, and are showing limited interest in rate reductions on loss-affected layers.

Buyers are generally looking to stretch terms and conditions, with many exploring multi-year capacity.

The reinsurance broker says there is plenty of capacity from traditional sources and insurance-linked securities.

Globally, reinsurance rates are still struggling to stabilise, dashing the industry’s hopes of a turnaround in pricing this year, the report says.

Buyers appear to have kept the upper hand in price negotiations, according to the reinsurance broker.

“With the January 1 renewal season setting the tone for [this year], reinsurers can only look forward to another demanding year, where luck will play an even larger role in determining their final results,” Willis Re Global CEO John Cavanagh said.

“While reinsurers are still able to report profitable results despite the underlying issues they face, the situation for many primary companies is much tougher.

“Rising combined ratios in many markets, driven by competition both from existing peers as well as from new style competitors utilising innovative low cost distribution and cost models, is a growing concern.”