Traditional reinsurers are offering more multiyear treaties as they compete with the insurance-linked securities market.

“Looking ahead to 2016, pretty much all markets will offer multiyear coverage, although the capacity available is clearly a function of price,” said James Kent, president of Willis Re North America in New York.

The traditional market has “come to terms” with the need to offer multiyear contracts, said Bryon Ehrhart, CEO Aon Benfield Americas in Chicago.

Northbrook, Illinois-based Allstate Corp. renewed its $4.42 billion per occurrence excess property catastrophe program as of June 1 with traditional reinsurers, which offered better pricing and terms than the ILS market, an Allstate spokesman said. The lower layers consist of one-, two- and three-year policies, and upper layers include terms of up to seven years, according to Allstate.

Large multiyear reinsurance programs typically have staggered expiration dates, in part to keep the program from being exposed to pricing conditions at any one renewal date, said John Beckman, chief underwriting officer at CNA Financial Corp. in Chicago, which he said negotiated its own multiyear cat cover the past two years.

The programs aren't limited to the largest ceding insurers.

New York-based Assurant Inc. added traditional multiyear policies for a small percentage of its per occurrence cat program for the first time in 2013, according to company reports.

By this year's renewal, the traditional multiyear component had grown to about 18% of Assurant's $1.47 billion in limits, along with traditional annual policies, cat bond coverage and collateralized reinsurance.

Along with per risk excess cat covers, Moody's Investors Service Inc. sees traditional reinsurers pressured to write multiyear aggregate reinsurance, following similar features of some cat bonds.

“Some reinsurers are likely to build up risk accumulations, through multiyear and multiperil policies, which could lead to higher losses in the event of elevated severity or frequency of insured catastrophes,” Moody's warned in its 2016 reinsurance outlook.

Some multiyear deals have already had an impact.

Bermuda-based Axis Capital Holdings Ltd. cited multiyear treaties in 2014 as one reason for an 11% decline in gross written reinsurance premiums in the first half of this year. London-based reinsurer Lancashire Holdings Ltd. similarly blamed multiyear policies for its first-half drop in written premiums.

Lancashire wrote a “significant number” of multiyear reinsurance deals in 2014 “precisely to mitigate the expected continued pricing declines,” it said in July.