A number of large UK cedants are reducing their spending on facultative reinsurance, according to Vanessa Macdonald-Smith, team leader at Faber Global.
Macdonald-Smith explained that there are a variety of reasons that cedants are taking this approach. “Some could have found that the outlay on facultative premium outweighed the return they earned on claims.”
“Others might have found that their facultative spend was in conflict with or duplicated their treaty spend. One cedant also went through a major restructuring which altered the sign-off procedure for facultative reinsurance purchases.”
She went on to explain that the focus for many cedants has changed too. According to Macdonald-Smith most are more concerned with retained premium income and much less on using facultative reinsurance as an underwriting tool.
“The important issue for Faber Global has been to provide analytical and transactional support to cedants during this time of transition, enabling our clients to find innovative ways to spend less money, while still protecting their accounts.”
