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.

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Q. What are the limitations of facultative reinsurance?
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