Fac demand in Asia set to remain robust amid hi-tech boom, growing local capacity

February 2 2026 by

Asia’s rapidly expanding hi-tech sector, coupled with robust manufacturing growth and significant nat cat exposure, has created an environment where the demand for facultative cover is outstripping local capacity.

“We expect capacity in Asia will continue to increase steadily with new capacity and new market entrants, but it’s still not matching the pace of the fast-growing needs from the booming industries, such as hi-tech, semicon, battery energy storage systems (BESS) and data centres,” said Cynthia Cui, managing director and head of APAC fac reinsurance at Howden Re.

“Often clients still rely on capacity from outside of the market – from the UK, for example, in addition to Europe and the Middle East.”

According to Cui, the demand for property direct and facultative (D&F) cover is particularly concentrated in several high-value and high-risk industries.

“The hi-tech and semiconductors industry is a key example where we see increasing demand for property fac reinsurance capacity,” she added.

“Besides that, warehouse risks, chemical processing, textile, downstream energy, power and utilities, and renewable energy, such as solar and offshore wind farms, also have high demand for operational insurance cover.”

Lately, she added, there is also significantly increasing demand for property insurance for BESS and data centres.

Grace Tan, head of complex property, casualty, and terrorism for Aon’s reinsurance solutions’ Asia facultative team, agreed that demand for property D&F in Asia is expected to remain strong in 2026.

“As a whole, the expectation would be for demand for direct property insurance to always be on an upward trend.”

Phil Robinson-Moore, Gallagher Re

“Companies are investing in larger new sites and expanding existing facilities to support domestic and international supply chains, driving higher insured values and more complex risk profiles,” she said.

“There is also an increasing number utilising savings from recent renewal cycles to enhance their program coverages and budget for new policies to widen the risk transfer scope beyond traditional property D&F cover.”

Phil Robinson-Moore, regional director for Asia Pacific fac at Gallagher Re, added that in terms of industries in Asia, there is obviously a lot of electronics manufacturing, car manufacturing situationally in different countries, as well as major energy risks, mining, and some major railway placements in the fac market.

“As a whole, the expectation would be for demand for direct property insurance to always be on an upward trend,” he added.

“Firstly, because you’re talking about developing economies. So there’s just more stuff to insure. And secondly, because you’ve got development of different products over time, such as the emergence of cyber or political violence. So there’s a general upward trend across the region which will vary country by country.”

While fac cover is bought for a lot of heavy occupancies, Robinson-Moore noted that the market is seeing a lot of fac placements on lighter occupancies, driven by nat cat exposures.

“So you can almost separate the fact that there’s very heavy operational exposure on some risks that need fac support, but there’s also very heavy nat cat exposures, where fac is bought … and that can even include SMEs and even some habitational risks,” he said.

Market dynamics

However, Robinson-Moore noted that Asia is subject to the same trends that the global insurance market is subject to, which is a general influx of capacity that is leading to pressure on signings on the insurance side.

“The inevitable impact of people having pressure on signings is that sometimes they buy less reinsurance because they just don’t have the line size on original placements that need fac in the same way,” he said.

“The value a broker can give is really being able to differentiate country by country, that’s what we really try to do.

“Obviously, there are parts of Asia where nat cat is the biggest concern: Japan would be the classic for that, where a huge amount of the fac buying is on a stand-alone earthquake basis.”

Meanwhile, there are regions that are less cat exposed but have large industries, Robinson-Moore said.

“You obviously have all the car manufacturing around the region. You’ve now have the emergence of data centres, very large data centres under construction or going operational, which is a very big topic for the global insurance market at the moment. So it definitely varies country by country,” he added.

Political tensions, especially in markets like Taiwan, are also a key driver.

“There are some major global companies that are headquartered in Asia. So they’re obviously looking at their exposure to various political tensions around the world, and we have seen more demand, not just for terrorism coverage but actually wider political violence cover as well,” he said.

Proportional vs non-proportional

One of the interesting aspects of fac as a strategic tool is the different relationships on the reinsurance side between cedent and those reinsuring.

In Asia, according to Howden Re’s Cui, “all risks quota share is usually preferred. In addition, standalone catastrophe cover, especially for earthquake, and, in certain markets, flood, continues to attract strong interest”.

According to Aon’s Tan, managing possible earnings volatility – a traditional driver of fac purchasing – remains part of the wider picture in Asia.

“On the whole, earth movements are noticeably more active in Asia; therefore, earthquake rating will be rather stable, and for those accounts which had losses – earthquake pricing will definitely increase.”

Cynthia Cui, Howden Re

“We expect a growing demand for tailored, data-driven proposals, particularly for clients who are focused on solutions that address volatility in earnings and supply chains corresponding to the complexity of the environment they operate in,” she added.

“Parametric structures are increasingly used to provide rapid liquidity and support for otherwise uninsured or under-insured exposures, particularly around natural catastrophe and supply chain disruption.”

Robinson-Moore also suggested that there is an element of proportional and non-proportional buying.

“What you tend to see during a soft market – and this isn’t specific to Asia – because of the influx of capacity, there are more people who are willing to write on a quota-share basis than they were during the hard market cycle,” he said.

“That can often be attractive to reinsurance buyers, because it’s simplified. That being said, equally when you have all this capacity available, it is possible to get very good, very attractive terms on a non-proportional basis if you approach reinsurers in the right way.”

Rating expectations

He added that the general rating trend is downward but stresses that “within Asia, that’s not absolutely across the board”.

“So, for instance, what we see in Japan is the cedents tend to value stability across a long period of time, so actually the rate reductions you see in a soft market are more measured, but equally the rate increases you see during a hard market are also much more measured as well,” Robinson-Moore added.

There are also specific areas in Asia that had losses last year, according to Robinson-Moore, “so there would be specific pockets where you’re not part of that general downwards trend”.

“In general, we’re seeing across the global market, and in Asia as well, that rates are falling between 10 and 20% as a general rule, though obviously there are specific exceptions to that,” he added.

“A lot of Lloyd’s markets now are widening their risk appetite so they can generate more business to protect their general premium flow. So we are seeing them write risks or territories that maybe they wouldn’t have looked at in the past. So all of that builds into capacity availability for Asia.”

Howden Re’s Cui also accepts that, generally speaking, as we have seen in the rest of the world, this is a soft market in Asia, yet there are pockets of rating opportunity.

“There have been some significant losses in the hi-tech and semicon industry last year,” Cui said.

“On the whole, earth movements are noticeably more active in Asia; therefore, earthquake rating will be rather stable, and for those accounts which had losses – earthquake pricing will definitely increase.”

And with such variability of pricing even in such a soft market, 2026 promises to be a fascinating year for property fac in Asia.

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