Question

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

a.

Ceding insurer does not have the option to cede in facultative reinsurance

b.

Ceding reinsurer has the option to cede in a facultative reinsurance

c.

Reinsurer does not have the option to accept facultative reinsurance

d.

Reinsurer does not have the option to decline risk of insurance company

Posted under IC85 Reinsurance Management

Answer: (b).Ceding reinsurer has the option to cede in a facultative reinsurance Explanation:Facultative reinsurance is a type of reinsurance contract where the ceding insurer has the option to cede and the reinsurer has the option to accept or decline a specific risk of a specific insured. So, option b is correct. Option a is incorrect because the ceding insurer has the option to cede in facultative reinsurance. Option c is incorrect because the reinsurer has the option to accept or decline facultative reinsurance. Option d is incorrect because the reinsurer has the option to decline the risk of the insurance company in facultative reinsurance.

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