Question

What are the limitations of facultative reinsurance?

a.

Requires less skilled personnel for underwriting individual risks

b.

Involves less administrative work as each offer has to be scrutinized

c.

Requires the reinsurer to have the necessary personnel with knowledge and capability to underwrite each exposure accurately

d.

Cannot be used to reduce the liability to treaty reinsurers on certain risks

Posted under IC85 Reinsurance Management

Answer: (c).Requires the reinsurer to have the necessary personnel with knowledge and capability to underwrite each exposure accurately Explanation:The limitations of facultative reinsurance are that it requires the use of skilled personnel and technical resources for underwriting individual risks, and involves more administrative work as each offer has to be scrutinized and separate data maintained for retention, limits, rates, and reinsurer/s involved for each facultative placement.

Interact with the Community - Share Your Thoughts

Uncertain About the Answer? Seek Clarification Here.

Understand the Explanation? Include it Here.

Q. What are the limitations of facultative reinsurance?
Add Comment

Similar Questions

Explore Relevant Multiple Choice Questions (MCQs)

Q. What are the considerations for a single Mega Risk Facultative Reinsurance Placement?

View solution

Q. Which of the following is correct with respect to facultative reinsurance?

View solution

Q. What is treaty reinsurance?

View solution

Q. What are the two ways in which treaty reinsurance may be transacted?

View solution

Q. What is the key difference between facultative and treaty reinsurance?Why are the administrative costs lower in treaty reinsurance than in facultative reinsurance?

View solution

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

View solution

Q. What is a formal treaty wording?

View solution

Q. Which of the following is not a characteristic of treaty reinsurance?

View solution

Q. Which of the following is typically described in a formal treaty wording for treaty reinsurance?

View solution

Q. How does an insurer achieve the desired level of reinsurance protection in treaty reinsurance?

View solution

Q. What is retrocession in reinsurance?

View solution

Q. What is the purpose of retrocession in reinsurance?

View solution

Q. What is Treaty Reinsurance?

View solution

Q. What are the two types of basis on which Treaty reinsurance may be transacted?

View solution

Q. What rights does each party forego in a Treaty Reinsurance agreement?

View solution

Q. What is a formal treaty wording in Treaty Reinsurance?

View solution

Q. What is the advantage of Treaty reinsurance over Facultative reinsurance in terms of administrative costs?

View solution

Q. ABC is a reinsurance company. It gets into a contract with another reinsurance company: XYZ Reinsurance Co. Ltd. Such contracts between two reinsurance companies are known as _______________

View solution

Q. What is Facultative Obligatory Treaty?

View solution

Q. Is Facultative Obligatory Treaty a common type of reinsurance contract?

View solution
View All MCQs on IC85 Reinsurance Management

Recommended Subjects

Are you eager to expand your knowledge beyond IC85 Reinsurance Management? We've handpicked a range of related categories that you might find intriguing.

Click on the categories below to discover a wealth of MCQs and enrich your understanding of various subjects. Happy exploring!

Cell Biology

Delve into the fascinating world of Cell Biology with our specialized category....

Dairy Engineering

Dive into the world of Dairy Engineering with our specialized category. Explore the...

Engineering Geology

Explore the dynamic field of Engineering Geology with our specialized category. Delve...

Basic Chemical Engineering

Get a solid foundation in Chemical Engineering with our Basic Chemical Engineering...

Highway Engineering

Navigate the road to efficient transportation with our Highway Engineering category....

International Relations

Navigate the complex world of International Relations with our dedicated category....

Financial Management and Financial Markets

Master the world of finance with our Financial Management and Financial Markets...

Surveying

Master the art of land surveying and geomatics with our Surveying category. Explore...

Mechanics of Materials

Unlock the principles of Mechanics of Materials with our specialized category. Dive...