Casualty fac turns niche as treaty clears wider market swathe: Amwins

The casualty facultative reinsurance market is transitioning towards a more intense focus on select difficult-to-place lines as more robust casualty treaty capacity has undercut opportunity in less distressed areas of the market, top casualty leaders at Amwins Re have claimed. 

“Competition for large facultative placements is significant in less distressed areas of the casualty marketplace,” Amwins leaders wrote of the state of play following “more organised” treaty renewals to date in 2024. Primary carriers can now quote with confidence, Amwins declared. 

That has focused demand for facultative reinsurance into some rather narrow niche segments, Amwins said of the developing trend. “For some of the more difficult-to-place accounts, facultative reinsurance is in demand, with reinsurers eager to retain renewals as well as write new, profitable business.”

Lower levels and moderate limits are the current rule. “While best leveraged in lower layers and attachments, every reinsurer has their sweet spot, which can vary by class and industry. Most prefer to play within the first $10m to $15m of the risk,” Amwins wrote. 

Transportation, workers compensation and select construction markets are demonstrating the opportunity. 

In transportation, carriers are concerned about the frequency and large loss trends that have treaty reinsurers on edge and are turning to facultative reinsurance to attack net exposures one or several exposures at a time, Amwins authors said of a more obviously distressed segment widely present in industry discussions. 

Workers’ compensation may also be drawing higher facultative reinsurance demand, in a seemingly much earlier signal of rising trend in the segment. “As workers’ comp claims continue to rise, carriers are looking to offset their risk and we are seeing an increase in the number of carriers returning to the facultative reinsurance marketplace,” Amwins casualty leaders wrote. 

The move to facultative can also follow truly secular niche market moves. Amwins cites construction rates for New York accounts where coverage has turned challenging “and we have seen an influx of these accounts move to facultative reinsurers.”

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