Reinsurance rates are set to tumble further in the 1 January renewal season, senior executives predicted this week.

Further consolidation was also predicted in the coming year.

Senior reinsurance figures said this week at the annual reinsurance Rendezvous in Monte Carlo that competition and excess capital could push prices down by as much as a 15%.

This was on top of a 5% slump this year following a benign hurricane season in 2006.

Benfield chief executive Grahame Chilton said that without a major loss in 2007, reinsurance rates could fall by between 5% and 10%.

Willis Re chief executive Paddy Jago said premiums could fall by up to 15%.

“I’ve always said capital drives the market more than anything else,” Jago told Global Reinsurance.

Ratings agency Fitch also predicted rating decreases and called for underwriting discipline.

Fitch senior insurance analyst Chris Waterman said: “Given the benign 2006 season, the sector faces potentially sharper fall rates in the 2008 renewals. Property and casualty lines were likely to see a deterioration – but the extent was speculative.”

But Paris Re chief executive Hans-Peter Gerhardt warned against taking a pessimistic view on rates. “It’s crazy that some companies are talking the market down,” he said.

Seymour Matthews, managing director of reinsurance at Heath Lambert, blamed popular hype for the continued softening rates across the market.

“A lot of it has to do with scaremongering,” he said. “People are feeling pressured to do what their competitors are doing.”

Peter Middleton, managing director of Markel International’s specialty division, said the US sub-prime crisis could lead to upwards rating pressure.

“It might generally help to harden things up, but at the moment it’s difficult to tell.”

While a benign hurricane season in 2007 could see reinsurers make record profits, some predict that it may spark further consolidation activity.

John Spencer, group chief executive of reinsurance broker BMS Associates, said: “The big theme is how difficult organisations are finding it to grow.”

There was so much capital in the industry at the moment that the only secure route to growth was through acquisition. Bermuda players would continue to look to Lloyd’s.

Chilton also predicted further consolidation.