The RBC Capital Markets analysts concluded after their sixth annual London Market trip meeting that despite pricing declines beginning to slow, 2017 would be too soon to see a turn in the market.
Insurers still turned a profit in 2016, but results have begun to deteriorate, RBC reported.
Overall prices fell by around 5% with pricing pressure most visible in international property catastrophe where it took a hit of 5-10% – in the U.S. this figure was at 0-5%.
A look at price levels in previous years shows the market beginning to stabilise with the rate of price decline dropping in 2016.
RBC forecasts a challenging year in 2017, saying underwriting results could see even greater pressure if catastrophe losses are at normal or high levels along with slightly reduced reserve releases.
But the 2017 outlook was not all doom and gloom, with RBC predicting an eventual unavoidable aggregate market loss that is bound to see prices boomerang back up.
Brokers appear to be navigating safer waters as they are less directly affected by insurance pricing due to their fee rather than commission focused structure – RBC said JLT stood out as having the most positive management commentary.
Market positions are being built in cyber which is seen to be an area with major growth potential across much of the insurance and reinsurance industry.
RBC concluded that there are still some attractive opportunities for reinsurance, but advised a more cautious, selective approach compared with previous years.