“The price decreases or cost decreases from capital and alternative markets firmed up a bit earlier than the traditional markets,” says Chi Hum, global head of insurance-linked securities distribution at New York City-based GC Securities, a division of MMC Securities LLC. The interest is there among investors, he says, but as rates have quickly fallen, investors have been hesitant to put more money in and accelerate the declines.

2. Shifting reinsurance capital landscape

Total capital dedicated to reinsurance is estimated at $400 billion. Traditional capital declined a bit, but alternative capital made up that difference. Alternative, or convergence, capital, which includes catastrophe bonds, industry loss warranties, collateralized reinsurance and sidecars increased 13% in 2015 to $68 billion.

The primary focus of alternative capital continues to be Property Cat, but the report cites some evidence of broadening appetite. While the general feeling is alternative capital has little interest in the Casualty reinsurance sector, Hum says it's not as simple as lumping investors together and saying they are interested or not interested in long-tail lines.

For traditional players, the report says increased evidence shows capital slightly shifting to insurance lines from reinsurance. Furthermore, it adds, many reinsurers reduced catastrophe exposure through the use of retro capacity, largely from the convergence market.

3. High capacity, softening rates in Casualty

Rates generally softened in 2015 and are expected to do so this year, Marsh says. Rates for General Liability were typically down 10% to up 5% in Q4, Lead Umbrella rates were typically down 5% to up 5% with excess layers down 10% to up 5%, and Workers' Comp rates were down 10% to flat for guaranteed cost programs and down 10% to up 5% to loss-sensitive programs, even as medical costs increased.

The report notes that, while rates are softening, underwriters are sharpening their underwriting focus. Stephen Kempsey, U.S. Casualty Practice leader for Marsh, says that means “increased scrutiny, more homework, more analytics, more underwriting referrals—and that probably results in a different type of risk selection or different attachment points.”

One standout in the casualty space is Commercial Auto. Kempsey says in a blog post that in Q4, “nearly half of all companies renewed with rate increases. And if losses continue to accumulate, this market is likely to remain challenging for most buyers in 2016.”

On the flip side, Workers' Comp— which Marsh notes has long been a “topic of conversation” for the industry—“continues to be favorable to insureds,” Kempsey says, with continued improvements in combined ratios.

4. favorable terms for buyers

The Marsh report says Commercial Property rates continued their two-year softening trend. Non-catastrophe-exposed properties saw rate decreases of between 5% and 10%, while cat-exposed properties saw decreases of between 5% and 15%.

Minimal cat losses, competition and the low cost of reinsurance helped drive down rates, says the report. While competition was not because of a flood of new entrants, Marsh says existing insurers generally increased their underwriting capacity and grew their business. Capacity increased for named windstorm, storm surge and earthquake risks.

Insureds have been able to secure favorable terms and conditions in 2015 as well, and that is expected to continue this year. Marsh says that, to lock in low rates, “many insureds sought to secure multiyear policies, to which insurers have become more amenable.”