In its latest 1st View Renewals report, which examines market conditions, the reinsurance broker said capacity withdrawals, where some reinsurers find pricing inadequate, are also evident.
However, the firm saw “considerable pricing variation” by class and territory, and any widespread pricing stabilisation remained “elusive”.
Willis Re’s global CEO John Cavanagh said: “With no material impact from catastrophe loss activity now for the last few years, rating pressure persists. So far in 2016, only one major catastrophe loss – the Fort McMurray fires – will produce any meaningful catastrophe claims for reinsurers.
“Any relief that pricing may be nearing the bottom of the cycle is counterbalanced by concern over how and when rates might start to increase, even modestly, on a wider basis. The alternative is a market that faces a number of years bumping along at current levels earning very modest returns.”
The report also noted that enhancing efficiency and cost control measures remained a priority for managers.
“The drive to achieve market efficiencies and cost reductions is picking up pace, particularly in the London market,” Cavanagh said.
On the recent issue of the referendum result where the UK has voted to leave the EU, the reinsurance broker said the exact implications of Brexit on future policy and regulation were unknown.
However, the firm predicts it is unlikely there will be any significant changes in the near future due to the two-year timeframe needed for the UK to negotiate the terms of leaving the EU.
“Underpinned by the strong customer-centric regulation in the UK and EU, we do not see any material risk to clients generally in terms of re/insurers’ ability in the immediate future to offer continuity in the supply of reinsurance capital and consistency of approach,” said Willis Re in the report.
“There is evidence that our industry may be better placed than other financial sector entities to manage the uncertainty developing from withdrawal.”