Global Trends in Facultative Reinsurance Rates for 2026

During the first half of 2026, facultative reinsurance buyers experienced rate reductions across most sectors and geographical regions, according to Gallagher Re's latest market report. The property insurance sector witnessed the most significant decreases, while the U.S. casualty market largely resisted these trends.

In North America, including the U.S. and Canada, property facultative rates fell by 20% to 25% due to heightened competition involving traditional markets in London and Bermuda, alongside new entrants and Managing General Agents (MGAs). Multi-year contracts garnered interest, as buyers sought advantageous positions for 2027 renewals.

In Latin America and the Caribbean, the rate decreases were even more pronounced, with reductions of up to 50% in Chile and Argentina for high-performing accounts and 15% to 20% for loss-free accounts in the Caribbean. The overall Latin American region saw an increase in reinsurer commissions, ranging from 2.5% to 5%, with soft market conditions projected to continue at a 25% to 30% reduction for the rest of the year.

Similarly, property insurance in Australia and New Zealand experienced average reductions of 20% to 25%, with certain high-risk sectors witnessing cuts as high as 40%. The Nordic region saw reductions between 10% and 25% for well-performing risks, while the UK domestic property market typically experienced a 20% decrease.

In Asia, Japan's earthquake facultative business had average rate cuts of about 5%, while Southeast Asia saw 5% to 15% reductions on loss-free risks. South Korea experienced a 5% to 10% decrease for large corporate accounts, marking 2025 as the first year of negative growth in the Korean property market due to premium reductions and rising reinsurance costs. The Middle East reported decreases of 15% to 20%.

However, the U.S. casualty market remained pressured, with heightened attention on automobile liability, umbrella and excess liability, construction, real estate, and healthcare sectors. Factors like nuclear verdicts, social inflation, increased litigation funding, and defense costs maintained a cautious underwriting environment. Despite ongoing capacity availability, insurers adopted stricter measures by reducing line sizes and raising attachment points in lead umbrella and lower excess positions.

The downstream energy market saw losses between $250 million and $400 million in the first half of 2026. Nonetheless, rates continued to fall, particularly in Asia and India, where reductions reached 25% to 40%. The rise of MGAs and facility structures lessened the requirement for open market capacity, further impacting pricing. In the Middle East, geopolitical tensions and increasing oil prices heightened concerns about property claims.

The renewables sector continued its growth trajectory, attracting new capacity, with forecasts predicting up to 20% growth between 2025 and 2035. Conventional power markets followed suit, reflecting downstream rate trends. Facility arrangements and structured capacity solutions played an increasingly prominent role. Technological advancements in data and underwriting facilitated quicker decision-making and selective risk placements. "Looking ahead, the availability of capacity is unlikely to be the defining feature of the next stage of the market cycle," stated Pablo Muñoz, CEO of facultative at Gallagher Re. The emphasis will be on how effectively capacity is utilized to support client needs and achieve long-term portfolio objectives.