With an uncharacteristically light cat year in the rearview mirror and an abundance of capital in the marketplace, high competition in the property-catastrophe market will continue into 2015 barring a cataclysmic event or series of events, according to the recent State of the Market: NAPCO Property-Catastrophe Insurance Insights report.

Global insured losses from catastrophes totaled just $17 billion in the first half of the year, well below the 10-year average of $25 billion, according to the report. At the same time, alternative reinsurance capital continues to pour into the industry, putting pressure on the price of traditional reinsurance.

“With interest income being so low and the stock market being very volatile, when you’ve got a pile of money and smart people behind it, they’re always looking for pockets of areas to invest,” says NAPCO CEO David Pagoumian. “A typical return for a property-cat writer who’s doing their job is 6-8%—that’s a very attractive number.”

The report reveals that alternative capital and insurance-linked securities could soon command 50% of the global property-catastrophe market limit, and annual catastrophe bond issuance rose 41% to $9.4 billion in the 12-month period ending June 30, 2014—the highest issuance level in the market’s history. “In an environment where traditional routes are not giving you what they traditionally give you, that starts to get people to look outside and smell other areas that perhaps smell better,” Pagoumian says.

According to the report, an estimated $20 billion of new capital has entered the market over the past 24 months. “Putting it simply, we’ve been found out by other sources,” Pagoumian says—and as a result, the price of property-catastrophe insurance has been inching downward, declining 5-20% for most accounts depending on loss history, location and previous price reductions.

In the face of a dangerous combination of extremely low cat losses and over-capitalization, Pagoumian asserts it would now take a cataclysmic $50-$70 billion event to “warrant the industry not giving any rate reductions on property-cat business.”

“We still have some fall left in the container,” he says. “If no events happen and all stays quiet and companies are real profitable as they continue to be profitable in this sector, there definitely will be an underwriting discipline that will toe the line.” The question is whether the property-catastrophe industry is capable of sustaining another cycle of rate reductions. “I would say we have one more cycle in us,” Pagoumian says. “I think we have another year of softening before that inflection point.”

Among the report’s key findings are a 6.4% rise in property-catastrophe net income to $26 billion in the first half of 2014, a 4% rise in net written premiums to $246.4 billion and a record-breaking policyholder surplus of $671.6 billion as of June 30, 2014—up 9.4% from the previous year.

Jacquelyn Connelly is IA senior editor.