How do I choose between different facultative reinsurance providers for a difficult placement with limited market appetite?

For a difficult facultative placement with limited market appetite, the “best” reinsurer is usually not just the cheapest or the biggest—it’s the one most likely to engage, quote, and ultimately bind on workable terms. A good way to choose between facultative reinsurance providers is to score them across a few practical dimensions:

1) Will they actually look at it?

For tight or unusual risks, some markets are better at handling complexity than others.

Check:

• Line of business expertise: Do they know this type of risk?
• Appetite for the exposure: Have they written similar deals recently?
• Decision speed: Can they turn around indications quickly?
• Underwriter accessibility: Do you have direct access to the decision-maker?

A reinsurer with strong appetite and fast feedback can be more valuable than one offering slightly better pricing but likely to decline or delay.

2) How flexible are they on structure?

Limited appetite often means the placement may need creativity.

Compare providers on their ability to work with:

• Higher retentions
• Quota share, excess of loss, or layered structures
• Sublimits, exclusions, or warranty language
• Blended or multi-year terms
• Special clauses for difficult locations, hazards, or loss histories

The best partner is often the one willing to help shape a structure that fits both your client and the market.

3) What is their pricing vs. terms tradeoff?

Don’t focus on rate alone.

Evaluate:

• Premium level
• Commission
• Attachment point / limit
• Exclusions and carve-backs
• Collateral or security requirements
• Subjectivities that could block binding

Sometimes a slightly higher premium is worth it if the terms are cleaner and the certainty of placement is much better.

4) How strong is their execution and reliability?

Especially on hard placements, “paper” is only part of the story.

Look at:

• Consistency in quoting and binding
• Whether their indications tend to stick
• Speed of issuing slips/binders
• Ability to follow through on final wording
• Past experience with claims handling and reserving behavior

A market that is easy to quote but slow or inconsistent at bind may create more problems than it solves.

5) What is their relationship value?

On difficult deals, relationships matter a lot.

Ask:

• Do they trust your submission quality?
• Are they more likely to support you because of your track record?
• Will they consider exceptions because of existing business?
• Are they open to dialogue rather than just a one-line decline?

If you have a strong relationship with an underwriter, that can materially improve your odds.

6) What is their financial and claims credibility?

For facultative reinsurance, you need confidence the reinsurer will perform when it matters.

Review:

• Financial strength ratings
• Reputation in claims payment
• Presence in the relevant jurisdiction
• Any history of disputes on similar wordings
• Security/counterparty considerations

In hard-to-place risks, a “yes” from a weaker counterparty may not be as valuable as a “no” from a strong one.

7) How broad is their network or panel?

If you’re struggling to place capacity, providers with broader distribution may help.

Consider whether they:

• Can offer multiple lines across a group
• Have access to different underwriting teams
• Can coordinate internally to support layered or shared participations
• Can introduce you to alternative markets if they decline

8) Practical selection method: use a simple scorecard

A simple weighted scorecard can help you compare providers objectively.

Example categories:

• Appetite for risk: 30%
• Speed of response: 20%
• Flexibility on terms: 20%
• Price competitiveness: 15%
• Claims/financial strength: 10%
• Relationship value: 5%

Then score each provider 1–5. The result often reveals that the “best” market is not the one with the best headline rate.

9) For difficult placements, sequence matters

A common strategy is:

1. Approach the markets most likely to support the deal
2. Use initial feedback to refine structure
3. Test smaller or more flexible providers for special terms
4. Keep a backup list for last-mile capacity

You generally want to avoid burning your best relationships with poor-quality submissions or asking too many markets too early without a clear structure.

10) Improve your submission before comparing providers

Sometimes limited appetite is partly a presentation problem.

Make sure your submission includes:

• Clear risk story and rationale
• Loss history with explanation
• Exposure data and modeling where relevant
• Risk improvements and mitigation measures
• Exact terms being requested
• Why the client needs facultative support now

A stronger submission can expand the appetite pool and make provider comparison more meaningful.

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Bottom line

Choose the facultative reinsurance provider that offers the best combination of:

• Likelihood of quote/bind
• Flexibility on structure and terms
• Speed and reliability
• Counterparty strength
• Relationship quality

For difficult placements, the “best” provider is often the one who can help solve the problem, not just price it.

If you want, I can also give you a sample decision matrix, a broker scorecard template, or a step-by-step placement strategy for a specific line of business.