DALLAS — Primary insurers will likely see flat or, at most, moderate increases at year-end reinsurance renewals, but reinsurers warn that they may have reached the bottom of the market.

While reinsurance capacity remains plentiful and, so far in 2016, catastrophe losses have been light, some liability insurers have announced reserve increases, prior-year reserve releases are slowing and some lines of coverage, such as auto liability, are seeing increased claims severity.

Several reinsurers say they think those developments may signal a change in the yearslong soft market for reinsurance; however, others say competition remains intense as nontraditional capital providers continue to show interest in the sector.

“I think the reinsurance market, as far as what’s happening, is probably not going to change dramatically,” said Jim Bradshaw, CEO of Willis Re North America. “I think probably we’ll see some deceleration of rate decreases, kind of more of the same.

Overall, it’s going to be more of the same.

I don’t see any dramatic changes on the horizon. There’s just a lot of excess capacity in the market now.”

He was speaking during an interview at the Property Casualty Insurers Association of America’s annual conference in Dallas late last month. Insurers, reinsurers and reinsurance brokers attend the conference and hold numerous individual meetings to discuss reinsurance renewals.

Keith Wolfe, Armonk, New York-based president of U.S. property/casualty-regional and national at Swiss Reinsurance

America Corp., said rate declines in the reinsurance sector are unsustainable. However, he said Swiss Re is still looking to expand its business.

“One of the things we’re focused on is how we can basically create new spend in the reinsurance space to address part of this problem,” he said. “We’d much rather go with much more creative and innovative ideas to create new opportunities as opposed to fight over the ones in place that everyone looks at a little bit differently, more aggressively than we do.”

For example, expanding into areas such as flood and earthquake cover, where insurance uptake is still low compared with other risks, is an opportunity for the reinsurance sector, Mr. Wolfe said.

“Switching away from catastrophe perils,” he added, “I think there’s a huge opportunity for us to look at the entrepreneurs from outside the insurance industry looking to bring new ideas into our space.” “I don’t think the reinsurance market will get any softer,” said Christopher Buse, senior vice president and manager of casualty treaty reinsurance for XL Group Ltd. in Stamford, Connecticut.

The market expectation is that casualty rates will be flat, with the possibility of some moderate increases, during year-end renewals, he said.

While capacity remains plentiful, some reserve increases announced in the past several weeks may signal increased pressure on casualty insurers, Mr. Buse said.

The property reinsurance sector remains competitive. Although Texas hailstorm losses hit some reinsurers and catastrophe bond issuers earlier this year, 2016 has generally seen light catastrophe losses. The property reinsurance sector remains flush with capacity, as it has seen an influx of alternative capital from pension funds and other investors over the past several years.

With depressed property reinsurance rates, primary property insurers may be the next sector to see an influx of alternative capital entering the market, according to Steven Levy, president of reinsurance at Princeton, New Jersey-based Munich Reinsurance America Inc.

Alternative capital investments in the reinsurance sector have slowed over the past two years as traditional reinsurance rates have fallen, Mr. Levy said during a panel discussion at PCI. However, “something I think we are going to see more of is alternative capital competing more directly with primary insurers … the primary property space is a much bigger opportunity space for alternative capital,” Mr. Levy said.

One source of competition for the traditional insurance and reinsurance sector that will likely not grow is hedge fund reinsurance, he said. Over the past few years, several hedge funds have set up reinsurance arms that seek to use less conservative investment strategies than are usually used in the reinsurance sector.

Most hedge funds over the past couple of years have generated subpar investment results, so “that’s hardly justification for a reinsurance business model where you have above-average combined ratios,” Mr. Levy said.

“I do think it’s a little too early to ring the death knell of hedge fund reinsurers, but it wouldn’t shock me if we are ringing that bell three to five years from now,” he said.