Question

Which of the following forms of reinsurance, reinsures risks on individual basis?

a.

Facultative

b.

Retrocession

c.

Treaty reinsurance

d.

Facultative obligatory treaty

Posted under IC85 Reinsurance Management

Answer: (a).Facultative Explanation:Facultative reinsurance is a form of reinsurance where the reinsurer evaluates each risk individually and has the option to accept or reject each risk that is presented to it by the ceding insurer. It is used to cover risks that are not covered by a treaty and is usually employed for large or unusual risks. In contrast, treaty reinsurance is a type of reinsurance that covers a number of risks under a single contract, while retrocession is a process whereby a reinsurance company reinsures another reinsurance company, and facultative obligatory treaty is a contract of reinsurance whereby the ceding insurer may cede risks of any agreed class of insurance which the reinsurer must accept if ceded.

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Q. Which of the following forms of reinsurance, reinsures risks on individual basis?
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