Facultative reinsurance turns strategic tool for practitioners

A survey conducted by WTW, the broker and risk advisory says insurers may face significant barriers accessing capacity as supply continues to fluctuate with cyclical market forces.

It noted that amid shifting market dynamics, facultative reinsurance is increasingly considered a core element of risk management strategies, but it is not always straightforward.

The survey conducted by WTW partner Coleman Parkes Research received 300 responses from senior decision makers within leading P/C insurance companies based in Europe, North America, Asia Pacific and Latin America, according to cirmagazine.com.

Results reflected a shift away from a transactional view of facultative reinsurance and a move towards using it as a tool to achieve strategic objectives and priorities, fill gaps in treaties and manage risk throughout the cycle in an increasingly complex and volatile market.

Head of direct and facultative at WTW, Garret Gaughan, stated, “Volatility in the global economy is impacting the insurance market, influencing everything from risk appetite and capital management to growth strategies. The results of our survey indicate that insurers are increasingly leveraging facultative reinsurance as a tool to manage these challenges. We are seeing facultative reinsurance increasingly used by carriers to enable expansion into new riskier product areas, for example. We found a strong correlation between the strategic objectives and greatest opportunities that respondents have identified for the next two years, which is fertile ground for new use cases for facultative reinsurance as a business enabler.”

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