Question

What is the purpose of placing business facultatively in reinsurance?

a.

To secure a profit advantage for direct insurers

b.

To produce a balanced book of business for direct insurers

c.

To provide coverage for peak risks business

d.

To operate on a non-proportional basis

Answer: (b).To produce a balanced book of business for direct insurers Explanation:Placing business facultatively enables direct insurers to produce a more balanced book of business for themselves and for their treaty reinsurers.

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Q. What is the purpose of placing business facultatively in reinsurance?

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