Coming of age – how technology and data are driving the evolution of facultative reinsurance

Abundant capacity, shifting buying habits and a tech and data mindset are reshaping EMEA facultative, says Aon's Nick Fraccalvieri.

Key points:
Fac shift from filler to strategy accelerating
Data drives smarter facultative buying
Capacity is abundant but precision matters

Facultative reinsurance has always relied on technical judgment and human negotiation, but a wave of digital transformation is now forcing the market to reconcile its traditional strengths with a faster, frictionless way of trading risk.

In that rapidly shifting environment, Nick Fraccalvieri, EMEA facultative CEO of Aon's Reinsurance Solutions, spoke to Baden-Baden Today about how the market is facing both softening conditions and unprecedented opportunity.

“The EMEA facultative market, just like the rest of the market, is moving in buyers’ favour,” he said, adding that “inflation, nat cat volatility and a desire of insurers to continue to grow” was putting pressure on pricing and terms.

Capacity is plentiful, but cedants are also demanding an efficient, data-enabled process that allows them to make decisions in real-time.

Fraccalvieri made it clear that this was not just cyclical softening. While “there is a cyclical change”, Aon is simultaneously driving “a structural change, utilising data and technology with the ultimate goal of simplifying the overall transaction”. This vision of seamless trading is about more than marketplace conditions; it’s about resetting how facultative capacity is accessed.

“The real winners will be those brokers that invest in technology and data to develop solutions that address a broader range of client challenges.”

Buying behaviours have evolved dramatically and Fraccalvieri recalled how at one time, “everyone would have said facultative was going to die”, and what was once “the unwanted piece of business” has become “a strategic tool that underwriters use day-in, day-out to mitigate their exposure and navigate the cyclical market”. In Fraccalvieri’s view, facultative is no longer a backstop but a precision instrument for steering balance sheet risk.

Aon's differentiator, he insisted, lay in its dual play on advisory insight and digital execution. “The real winners will be those brokers that invest in technology and data to develop solutions that address a broader range of client challenges,” he said. Aon is funnelling resources into platforms, data ingestion and AI so that facultative decisions can be made with instant clarity. “There is a digital play for us in terms of organising the way we transact, and a data information play to be used as a strategic advisory tool.”

Geographic dynamics add further complexity. With nat cat volatility in southern Europe, North Africa and the Middle East, demand patterns are shifting and construction-led growth is generating fresh facultative placements across Europe and beyond.

“We are one of the few that can articulate both local and global strategy,” Fraccalvieri said, pointing to an Aon presence across nearly every EMEA territory coupled with London and global market leverage.

But technology and data alone aren’t enough – talent will determine whether facultative can scale without losing its technical credibility. “In the past three years, we have significantly scaled revenues without significantly scaling headcount, and we need to consider the talent required to meet future needs,” Fraccalvieri noted. Automation is helping, but building a next generation with both “mathematical skills and a commercial mindset” remains a major priority. Aon's graduate intake saw “almost 3,500 applications for 300 places”, signalling a renewed interest in facultative careers, but these potential industry recruits still need to be immersed in “the beautiful way in which the reinsurance market works, with human interaction at its core”.

That search for talent is far from straightforward: “It is objectively difficult to just find great talent without searching,” but Aon creates its own pipeline. “The number of people applying specifically now for the different parts of Aon is incredible, and it gives us the ability to select, hopefully, the right individuals with the right skills.”

Looking ahead, Fraccalvieri does not predict a revolution but a steady evolution toward fully digital facultative trading. “Our hope is that one day, people will be able to insert information, receive a quote and buy the quote directly without our intervention, if they so choose.” This would free talent to focus on the more complex, high-stakes risks, and for Fraccalvieri, the shift won’t eliminate facultative, it will elevate it.

What is certain is that facultative is no longer just a solution to an inefficiency that needs to be managed; it is becoming a dynamic, technology-enabled strategic lever. And those ready to merge digital intelligence with real human expertise will shape the next phase of this market.

Nick Fraccalvieri is EMEA facultative chief executive officer of Aon's Reinsurance Solutions. He can be reached at: nick.fraccalvieri@aon.com.

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