The UK insurance market risks "talking itself into a soft market", according to a senior industry figure.
Allianz Cornhill chief executive Andrew Torrance disputed claims that the market is softening, because, he said, rates were still rising, though not at 2003 levels.
Torrance said insurers were continuing to achieve rate increases in all areas except for global property and energy.
He said that while energy rates were down about 6% in the first quarter of 2004, three large losses had seen rates "stabilise".
But rates in the reinsurance market continued to fall.
Group chief executive of reinsurance broker Cooper Gay, Toby Esser, said energy reinsurance rates continued to go "further south", despite the losses. Esser said that reinsurance rates were down 10%-15% on average, with some sectors down by as much as 40%, primarily led by US property.
He said London was being "dragged down" by a price war. "It has been very aggressive. In fact it has become farcical at times, with a bidding war starting at one price, then it gets lower, and we go back with a lower price - back and forth."
Esser said that aside from energy, catastrophic risks and heavy industrial were also being affected by falling rates in the UK and Europe.
Concerns about the impact of excess capacity on rates were also fuelled this week with Arch Insurance Company (Europe), a subsidiary of Bermuda-based insurer and reinsurer Arch Capital, receiving approval from the FSA to commence underwriting in the UK.
As revealed exclusively by Insurance Times (4 March), Arch Europe chief executive Robert Van Gieson said it would concentrate on Lloyd's and the London market, writing £40m worth of business in 2004 and £100m in 2005.
Van Gieson said Arch would write construction and engineering, onshore and offshore energy, executive assurance covers and professional indemnity.
