London Market rides E&S flows to facultative reinsurance boom: Amwins

Facultative reinsurance is booming in the wake of the ever-rising flows to the E&S market and lingering gaps in treaty reinsurance covers, with the London Market playing a key role in a rising wave of supply, analysts at wholesale insurance brokerage and delegated authority group Amwins have claimed in a note to markets. 

“The facultative market has seen increased competition and a new downward pressure on rates as Lloyds looks for new and creative ways to book premium,” Amwins said of the impact from the Lloyd's 2024 business plan as announced during the peak of the reinsurance hard market. 

The boom follows directly on “new capacity in the E&S and retail space,” Amwins said of a market where special and individual risks can frequently take individual reinsurance backing. Trends in property facultative “have mimicked what we have seen on the E&S side” as the broader property market remains “in a constant state of flux.”

Facultative demand also “remains strong” on account of the lingering gaps in treaty programs after the 2023 reinsurance market reset hacked away at lower layer and aggregate coverages and shook up gross-to-net exposure.

A return by carriers to large shared and layered accounts has “trickled over” to facultative as carriers find backing for the larger lines being written, including the “return of the $100 million line,” Amwins said of one key driver. 

Elsewhere, rising cat sub-limits in construction policies and a move to cover gaps on health care and real estate are also driving deals in facultative reinsurance.

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