Many insurers are at risk of folding after a market-wide failure to restore pricing discipline post Hurricane Katrina, Ascot Underwriting chief executive Martin Reith has warned.

Reith said that several insurers had failed to adequately anticipate rate hikes in the reinsurance market and would be left 'woefully overexposed' because they lacked the capital to buy enough reinsurance cover.

There was also a widespread shortage in the amount of catastrophe reinsurance available, he argued. Reith said: "The market's response as a whole has been pathetic."

A spokesman for Standard & Poor's confirmed that most reinsurers had delayed the renewals process beyond 1 January due to the impact of last year's hurricanes.