After the key January 1st, 2026, renewals, the global facultative reinsurance market has entered into a softer phase as a result of abundant capital, expanding appetite, improved technical results, and a steady flow of new capacity, according to Pablo Muñoz, Chief Executive Officer (CEO) of Facultative for global reinsurance broking and advisory firm, Gallagher Re.
In 2026, Muñoz expects that these conditions will remain key in creating a more nuanced trading environment, where opportunity and volatility coexist.
Muñoz explained, “Pricing across most lines and regions has continued to soften, with reductions broadly consistent throughout the market. Differentiation is present but remains modest, reflecting a soft market rather than a structurally segmented one.”
“Stronger risks”, which are supported by credible data, clear narratives, and active risk-management practices, have secured the most favourable outcomes, with challenging risks benefiting from the overall competitive backdrop.
The property markets have experienced some of the most pronounced rate reductions, driven by strong global supply and expanding appetite from both traditional carriers and MGAs. Meanwhile, terms and conditions have broadened somewhat, with the use of facilities and structured solutions increased as carriers have sought both efficiency and scale.
“Energy, power and renewables have remained soft despite notable downstream losses, with regional dynamics diverging and competition intensifying. Casualty markets have also been easing, though with greater variability influenced by litigation trends, social inflation and local market behaviour,” said Muñoz.
Muñoz believes that capacity will remain strong, though reinsurers will continue to manage volatility carefully, particularly in higher-hazard classes and long-tail exposures.
The market will be assisted by facilities, delegated mechanisms, and data-driven underwriting platforms. Additionally, Muñoz stated, “Asia, the Middle East and Latin America & the Caribbean will remain highly competitive; the US will also soften, albeit with greater caution; and London will continue to face pressure from both local and global capacity. These differences are minor rather than meaningful, reflecting the fact that the market will remain broadly soft.”
He concluded that in a softening market, the role of a facultative intermediary becomes “increasingly important, not only to place risk, but to provide clarity, anticipate shifts and position clients to benefit from a market that rewards performance, transparency and strategic engagement.”
