More Bermudians than ever have flown in to the world's largest reinsurance conference, Les Rendez-Vous de Monte Carlo.

The annual event is seen as key as it is where reinsurance executives and brokers hold dozens of meetings a day to thrash out what pricing is going to be like on January 1 next year.

This in turn will determine, world-wide, what individuals and companies pay for their insurance next year.

Reinsurance is the insurance that insurance companies take out, and reinsurers hold on their books some of the biggest risks in the world such as hurricanes, plane crashes, terror attacks. If the price is high, then it will be passed on by insurance companies to customers. If the price is low, people should expect it to go down.

This year the price of reinsurance is expected to fall by between five and 10 percent, according to market watchers. Last year reinsurance companies saw a year of bumper profits after a large price hike following Hurricanes Katrina, Rita and Wilma and then few natural or man-made catastrophes in 2006 to dent profits.

Clients are now demanding price cuts, but reinsurance companies are reluctant to give them as weather watchers have been predicting a bad hurricane season.

Other analysts say that prices rose too steeply in 2005/6 and that the market is just naturally re-adjusting itself by softening, the term used for falling prices.

Reinsurers tend to pay the lion's share of insurance claims when hurricanes make landfall as insurance companies use them to insure against large losses.

Already there have been two high severity storms, hurricanes Dean and Felix, which reinsurers are using to try to keep prices high.

"It's unprecedented for the first two storms in a hurricane season to reach category five," said Matthew Grant, chief markets officer at Risk Management Solutions.

"Both have taken a fortunate track and struck scarcely populated areas, so the damage has been fairly minimal given their intensity. The US coast is currently being protected by a high pressure system that is keeping tracks further south.

"The indications are that this high will stay in its current position through to the middle of September, and the mid point of the season is the second week of September."

The timing of the Monte Carlo event in September has coincided with some of the biggest catastrophes in recent years. During the September 11, 2001 attacks, the conference ground to a standstill as everyone watched with horror as the twin towers of the World Trade Center in New Yrok collapsed.

Then Hurricane Katrina had just hit in 2005 when the conference started, and the delegates at the conference spent the time trying to work out the implications of the disaster, which led to a string of re/insurance companies setting up in Bermuda.

Many of these companies will be travelling to Monte Carlo in search of new business in Europe to diversify their portfolio away from US and Gulf coastal catastrophe risk, which was so profitable following the 2005 hurricanes.

Some companies have already bought into Lloyd's of London as a way of accessing new markets, and the feeling is that the newer Bermudians will be putting on a show to attract more business. The more established players will also be there, schmoozing with the rest of them at the string of glittering champagne-fuelled parties.

Informal meetings start early, before breakfast, and are often in half hour or hour slots in the Café de Paris in the square at the famous casino.

Then there are lunches, pre-and post-dinner drinks as well as the round of cocktail parties. The Bermuda contingent holds a lunch on the last conference day, Wednesday, in the gardens which overlook the Place du Casino.

One of the biggest topics this year, apart from pricing and weather predictions, is that insurance companies are retaining more risk and turning to the capital markets instead of reinsurance companies for money to back the risks they hold.

Those in the market say that, despite the higher reinsurance rates, some insurers have been reluctant to pass on the higher costs to their customers in recent years.

In fact many insurance companies have been raising money either through well-established catastrophe bonds or other newer capital markets tools, rather than go to reinsurance companies who are charging such high prices.

James Vickers, chairman of Willis Re International, one of the world's largest brokers, said: "One of the interesting dynamics in the market place currently is the divergence between reinsurance prices and the original rates.

"The reinsurers will be looking to hold their prices, but may feel their revenue coming under pressure as insurers retain more of the risk. This may mean that eventually they will have to follow the prices down in order to write more of the business."

Mike Bungert president and chief executive officer of Aon Re Global-Americas, said insurance companies are retaining more risk for a couple of reasons.

"Last year was a record year in the property and casualty industry," said Bungert. "Capital increased by 15-20 percent and obviously companies have to show a return on the capital or return it to shareholders or policyholders.

"With limited premium growth opportunities from new business, and real rate reductions, premium growth from increasing reinsurance retentions looks attractive."

He said there was feeling in the industry that the pricing and poor underwriting judgements of the late 1990s were behind the industry.

He added: "Only time will tell. I believe those companies with sophisticated underwriting and efficient capital models will differentiate themselves from the rest during the next several years."