Question

What is the main difference between facultative and treaty reinsurance?

a.

In facultative reinsurance, the reinsurer has no option to decline the risk, whereas in treaty reinsurance, the reinsurer can decline the risk.

b.

In facultative reinsurance, the risk is assessed at an individual basis, whereas in treaty reinsurance, the risk is assessed at a portfolio level.

c.

In facultative reinsurance, the reinsurer has to accept the risk of the direct insurance company, whereas in treaty reinsurance, the reinsurer can decline the risk.

d.

None of the above.

Posted under IC22 Life Insurance Underwriting

Answer: (b).In facultative reinsurance, the risk is assessed at an individual basis, whereas in treaty reinsurance, the risk is assessed at a portfolio level. Explanation:The main difference between facultative and treaty reinsurance is that in facultative reinsurance, the risk is assessed at an individual basis, whereas in treaty reinsurance, the risk is assessed at a portfolio level.

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Q. What is the main difference between facultative and treaty reinsurance?
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