In a recent Q2 earnings call, Aon President Eric Andersen shed light on the shifting landscape of the reinsurance market and emphasised the increasing significance of facultative reinsurance in the second half of the year.
Clients, faced with the evolving reinsurance market, are making their own decisions, leading to alterations in their reinsurance strategies.
According to Andersen, clients are now making choices such as refraining from purchasing certain layers of reinsurance, reducing the extent of their coverage, or adopting different approaches to reinsurance capital utilisation for their businesses.
Aon, as a major player in the industry, supports its clients in navigating these decisions, guiding them through how they can effectively leverage reinsurance capital to manage their risk exposures.
“I think, on the second-half, it tends to be more around the ILS business and facultative business and I do think, we had a very strong first-half in fact, and our expectation is that should continue, as the primary clients now may have less low-level reinsurance protection on property catastrophe, or secondary perils like wildfires, or hail storms,” Andersen said.
As a result, insurers are increasingly turning to facultative reinsurance for individual risk-based solutions, allowing them to manage their exposure more effectively.
Notably, facultative reinsurance is not only confined to traditional reinsurance scenarios. It is also being utilised by captives and large corporations aiming to access both insurance and reinsurance markets.
This approach offers them flexibility and tailored risk coverage options that cater specifically to their unique needs.
