Gallagher Re Reports Softening Facultative Reinsurance Market

Gallagher Re's The Facultative View: Global Facultative Market Report—A Market in Transition (January 2026) examines conditions across the global facultative reinsurance market and outlines expectations for 2026 and beyond. Gallagher Re states that the market has moved decisively into a softer phase following several years of recalibration, supported by abundant capital, expanding carrier appetite, improved technical results, and new capacity. 

Pricing across most lines and regions has continued to soften, with reductions broadly consistent throughout the market, according to the report. While some differentiation exists, Gallagher Re said it remains modest, reflecting a broadly competitive environment in which stronger risks supported by credible data and active risk management are achieving the most favorable outcomes. 

Property: Widespread Softening 

Property has experienced some of the most pronounced rate reductions, driven by strong global supply and competition from traditional insurers and managing general agents (MGAs), per the report. Terms and conditions have broadened in several regions, and facilities and structured solutions are being used more frequently as insurers seek scale and efficiency. 

In the United States and Canada, average property rate reductions of 25–30 percent were typical during the renewal period, with even loss-affected accounts seeing double-digit decreases, according to Gallagher Re. Similar competitive conditions were reported across Latin America, parts of Asia, Australia and New Zealand, and the Middle East, though reductions varied by territory. 

For example, Gallagher Re reports 30–40 percent reductions on loss-free risks in certain Latin American markets, 10–20 percent decreases in South East Asia and Singapore, and double-digit reductions in Australia and New Zealand. In the United Kingdom, rates have typically fallen 25–30 percent, with some placements seeing reductions of up to 40 percent. 

Despite regional variation, the broader property theme is consistent: abundant capacity and heightened competition are driving continued rate easing. 

Casualty: Diverging Conditions 

Casualty conditions are more mixed, per the report. In North America, automobile liability remains the most challenging segment, with many states experiencing 10–25 percent rate increases even on clean risks due to ongoing loss activity and nuclear verdict exposure, according to Gallagher Re. 

General liability has remained comparatively stable, with rates generally flat or up by low single digits, while underwriting discipline has increased in higher-hazard sectors. Workers compensation continues to demonstrate long-term underwriting profitability, reducing facultative demand in some cases as cedants retain more premium. 

Umbrella and excess reinsurance in North America remains highly stressed, with double-digit rate increases continuing for the seventh consecutive year and cumulative increases exceeding 250 percent since 2019, according to the report. 

Outside North America, London and international casualty markets are showing softening conditions driven by increased competition and new capacity from Lloyd's and MGAs, with facultative rates expected to decline by 5–20 percent in some segments, per Gallagher Re. 

Energy and Specialty: Losses Amid Softening 

In global specialty lines, the downstream energy market experienced significant insured losses in 2025 totaling approximately $4.5 billion, exceeding premium income levels, according to Gallagher Re. Despite this loss activity, the report indicates that rates are expected to continue softening into 2026 due to abundant capacity, with reductions ranging from 5–10 percent in the United States to as much as 35–40 percent in parts of the Middle East and Asia. 

Power and renewables are also experiencing soft market conditions, though not to the same extent as downstream energy, per the report. Gallagher Re notes that growing competition and expanding capacity continue to place downward pressure on pricing, even as renewable energy demand increases globally. 

Outlook: Soft but Selective 

Looking ahead, Gallagher Re expects the facultative market to remain well-capitalized, but with reinsurers exercising greater discipline around volatility. The report also points to growing use of facilities and delegated underwriting platforms, along with regional pricing differences that are present but not dramatic. 

According to the report, the facultative market is expected to remain broadly soft through 2026, though volatility management and disciplined deployment of capacity remain central considerations for reinsurers.