Kathmandu. Insurance companies around the world are increasing the use of facultative reinsurance to manage capital, increase efficiencies, and enter new markets in search of growth opportunities in a sluggish market. Facultative reinsurance is a type of insurance protection. In which insurance companies enter into a separate reinsurance contract for a specific risk or insurance policy on a case-by-case basis.
The ‘Facultative Reinsurance Report-2026’ survey, conducted by WTW Business Willis and Coleman Parks Research, surveyed 380 senior insurance executives across North America, Europe, the Middle East, Asia Pacific and Latin America. More than half (52 per cent) cited the purchase of facultative reinsurance as their primary reason for capital management, compared to 44 per cent in 2024.
About 56 percent of companies cited global expansion as one of their biggest opportunities in the next two years. That was 39 percent previously.
Entering new markets and risk areas was a key strategic objective for 52 percent of insurance companies. That was 45 percent in the previous survey.
Apart from this, 55 percent of the companies mentioned capacity expansion as a priority. Which was 48 percent earlier.
The survey also found that 60 percent of insurance companies expect to increase the use of flexive reinsurance in the next two years. While 13 percent plan to reduce its use.
About 82 percent of companies said that factorative reinsurance is an important part of their strategy to manage risk, capacity, capital and risk. Only 22 percent of companies said they would use it as a last resort, compared to 28 percent in 2024.
These results show that insurance companies are changing the way they use flexive reinsurance. They are now using it primarily to support expansion and capital management rather than to protect against difficult risks.
In addition, insurance companies are becoming more concerned about new risks that could affect market conditions. 57 percent of respondents mentioned geopolitical stress (previously 52 percent). While 54 percent mentioned cyber risk (previously 24 percent) and 40 percent mentioned climate risk (previously 30 percent).
According to Garrett Gaughan, global head of directs and faculties at Willis, facultative reinsurance is increasingly being used to help insurance companies expand capacity, enter new markets, and manage capital while providing flexibility in the midst of uncertainty. -Agency
