What is the Definition of Facultative Reinsurance?

What is the Definition of Facultative Reinsurance?

A reinsurance policy that provides an insurer with coverage for specific individual risks that are unusual or so large that they aren’t covered in the insurance company’s reinsurance treaties. This can include policies for jumbo jets or oil rigs. Reinsurers have no obligation to take on facultative reinsurance, but can assess each risk individually. By contrast, under treaty reinsurance, the reinsurer agrees to assume a certain percentage of entire classes of business, such as various kinds of auto, up to preset limits.

Source: Insurance Handbook A guide to insurance: what it does and how it works | https://www.iii.org/

Label: Insurance
Theme: Dictionary of Insurance Terms

Other Questions: What is the definition of Annuity?

What is the Definition of Facultative Reinsurance?

What is the Definition of Facultative Reinsurance?

You can find random definition and meaning of insurance terms below:


Meaning of Retrocession in Insurance Terms

The reinsurance bought by reinsurers to protect their financial stability.


Meaning of Return On Equity in Insurance Terms

Net income divided by total equity. Measures profitability by showing how efficiently invested capital is being used.


Meaning of Rider in Insurance Terms

An attachment to an insurance policy that alters the policy’s coverage or terms.


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