Question

What is the key difference between facultative and treaty reinsurance?

a.

Treaty reinsurance is a contract where the reinsurer has the option to accept or decline risks

b.

Facultative reinsurance provides automatic cover for all risks

c.

Treaty reinsurance automatically accepts all risks falling within the scope of the agreement

d.

Treaty reinsurance only covers a specific risk or policy

Posted under IC85 Reinsurance Management

Answer: (c).Treaty reinsurance automatically accepts all risks falling within the scope of the agreement Explanation:The key difference between facultative and treaty reinsurance is that treaty reinsurance automatically accepts all risks falling within the scope of the agreement, while facultative reinsurance provides cover for specific risks.

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