Question

What is a facultative treaty in reinsurance?

a.

A reinsurance contract that automatically accepts all individual risks

b.

A reinsurance contract that obligates the ceding insurer to cede risks

c.

A reinsurance contract that allows the reinsurer to decline individual risks

d.

A reinsurance contract that describes the handling of individual facultative reinsurances

Posted under IC85 Reinsurance Management

Answer: (d).A reinsurance contract that describes the handling of individual facultative reinsurances Explanation:A facultative treaty is a reinsurance contract under which the ceding insurer has the option to cede and the reinsurer has the option to accept or decline individual risks. The contract outlines how individual facultative reinsurances will be handled.

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Q. What is a facultative treaty in reinsurance?
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