Question

What is facultative reinsurance?

a.

Reinsurance of all insurance policies provided by a single policy

b.

Reinsurance that shares the risk between the reinsured and reinsurer

c.

Reinsurance that allows both parties to accept or reject individual risks

d.

Reinsurance that automatically accepts all individual risks

Posted under IC85 Reinsurance Management

Answer: (c).Reinsurance that allows both parties to accept or reject individual risks Explanation:Facultative reinsurance involves the reinsurance of part or all of the insurance provided by a single policy, based on the sharing of risk. The term "facultative" indicates that both the reinsured and reinsurer have the option to accept or reject individual risks.

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