Facultative reinsurance, once used mainly as a defensive backstop against problem risks, is increasingly deployed by insurers as a strategic tool to fund growth as the reinsurance market softens, according to industry reporting spanning multiple brokers through the first three quarters of 2026.
A survey of 380 senior insurance decision-makers, published by Willis, a WTW business, found that more than half of insurers (52%) cited capital management as a key reason for buying facultative reinsurance, up from 44% in Willis' 2024 survey. Global expansion ranked among the greatest opportunities for the next two years for 56% of respondents, up from 39% previously. Some 52% named entering new markets and risk areas as a top strategic objective over the next two years, up from 45%, while 55% cited increasing capacity as a top objective, up from 48%.
The Facultative Reinsurance Report 2026, produced with Coleman Parkes Research, surveyed executives across North America, Europe, the Middle East, Asia-Pacific and Latin America between February and March 2026.
The findings regarding this shift have been building since the January renewals. The global facultative reinsurance market entered "a softer phase" following those renewals, driven by abundant capital, expanding underwriting appetite, improved technical results and steady inflows of new capacity, said Pablo Muñoz, chief executive of Facultative at Gallagher Re, in February.
Muñoz said these conditions would remain key to a more nuanced trading environment where opportunity and volatility coexist. "Pricing across most lines and regions has continued to soften, with reductions broadly consistent throughout the market," Muñoz said, adding that differentiation between risk classes remained modest.
Aon reported a related trend in Asia-Pacific: insurers there ramped up their use of facultative reinsurance in the first quarter of 2026 as carriers across the region sought to support growth, manage volatility and push into new lines of business amid a rapidly softening reinsurance market, according to the broker. Aon reported particularly strong demand in emerging risk categories such as data centers and green energy. Separately, Aon's April 2026 renewal report put global reinsurance capital at a record $785 billion, with demand rising roughly 10% and double-digit rate reductions recorded in Japan, Korea and India.
The Willis findings echo the shift Gallagher Re and Aon described independently: 60% of insurers surveyed by Willis expect to increase their use of facultative reinsurance over the next two years, compared with 13% who plan to buy less. And 82% said facultative reinsurance is now a key part of their strategy for managing risk, capacity, capital and appetite, while just 22% said they use it as a last resort, down from 28% in 2024, Willis found.
The Willis survey also pointed to rising concern over emerging risks that could alter market dynamics. Geopolitical tensions were cited by 57% of respondents, up from 52% in 2024, while 54% cited cyber threats – more than double the 24% who cited cyber in 2024 – and 40% cited climate-related exposures, up from 30%.
"While market conditions are creating significant opportunities for growth, insurers remain aware of the risks that could quickly present themselves," said Garret Gaughan, global head of direct and facultative at Willis. "Our research shows that facultative reinsurance is increasingly being used as a strategic tool to help insurers expand their capacity, enter new markets and manage capital efficiently."
Company size among Willis respondents varied, with 47% reporting gross written premium of $1 billion to $5 billion, 35% reporting $5 billion to $10 billion, and 19% reporting $10 billion or more.
