LONDON, Dec 30 (Reuters) - Global property and catastrophe reinsurance prices fell 5.7 percent in the key Jan. 1, 2017, renewal period, a slower decline than in the previous three years as prices approach record lows, broker JLT Re said on Friday.
Reinsurance prices have been falling for the past few years as traditional reinsurers face competition from new players and from products such as catastrophe bonds, which offer hefty returns compared with most global asset markets.
There have also been few major catastrophes in countries where insurance penetration is high and this has put pressure on prices too.
“Global property-catastrophe pricing is now 33 percent below 2013 levels and approaching the previous cyclical low of the late 1990s,” David Flandro, global head of analytics at JLT Re, said in a statement.
“It is becoming clearer that the scope for further price reductions is limited for some classes.”
In some lines of insurance, rates are near levels where expected returns were falling below the cost of capital, Flandro said.
JLT Re’s property-catastrophe reinsurance index fell 8.2 pct at Jan. 1, 2016, renewals, 11 percent in 2015 and 12 percent in 2014. Rates for other forms of reinsurance such as healthcare were flat to moderately lower at the Jan. 1, 2017, renewals.
Global reinsurance capital of $320 billion remains at record highs, the broker said. (Reporting by Carolyn Cohn; editing by David Clarke)