Question

What is the advantage of using facultative reinsurance to reinsure hazardous risks not protected by treaty arrangements?

a.

It reduces the liability to treaty reinsurers on certain risks

b.

It reduces the insurer's liability in a certain area

c.

It provides extra capacity

d.

It assists insurers to fill voids in coverage created by reinsurance treaty exclusions

Posted under IC85 Reinsurance Management

Answer: (d).It assists insurers to fill voids in coverage created by reinsurance treaty exclusions Explanation:The advantage of using facultative reinsurance to reinsure hazardous risks not protected by treaty arrangements is that it "assists insurers to fill voids in coverage created by reinsurance treaty exclusions by negotiating a separate facultative reinsurance contract for a particular policy or group of policies."

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Q. What is the advantage of using facultative reinsurance to reinsure hazardous risks not protected by treaty arrangements?
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