The catastrophe insurance market is so bad it's good.

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The numbers haven't been better for the global catastrophe insurance industry as firms are flush with capital after not experiencing a major loss in more than two years since Superstorm Sandy.

So why is everyone so glum?

The essential answer is that although catastrophe insurers--and reinsurers that back them up--are overflowing with cash, they have few ways to put it to work and grow their business. At the same time, new entrants are piling into the catastrophe business and undercutting any attempts by established players to increase prices.

All in all, it's a potent mix of market forces that is hammering the insurance industry hard.

"With the competitive pressures and the amount of capital that is out there, I don't see growth for a long time," said Matthew Mosher, senior vice president of Rating Services at A.M. Best in Oldwick, New Jersey, at the Property/Casualty Insurance Joint Industry Forum in January.

The global reinsurance industry--which essentially provides insurance for global catastrophe carriers--is dripping with "abundant" capital, according to a report by Aon Benfield released in January. Global reinsurance capital hit a record $575 billion in January, which is up 5 percent year-over-year.

The coffers are overflowing as a result of high retained earnings and below-average catastrophe losses. Without a major catastrophe event on par with 2005's Hurricane Katrina, insurers are unable to reload their capital base and demand higher prices. Global insured cat losses for 2014 were $34 billion, according to insurance broker Guy Carpenter, which is the lowest total in four years and 25 percent lower than 2013.

The result is consistently falling property/catastrophe insurance prices over the past several years.

In fact, insurance prices have been dropping, with Guy Carpenter's Global Property Catastrophe Reinsurance Rate-on-Line Index falling by 11 percent at the January 2015 renewals. This year's insurance take-up was characterized "by lower rates, excess capacity and broader terms and conditions," according to a report.

And while traditional insurers are attempting to battle market forces in the industry, they...

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