Question

What is the primary purpose of facultative reinsurance?

Q: Answer-What is the primary purpose of facultative reinsurance?

Facultative reinsurance is used to cover individual risks, often those that are large or unusual, on a case-by-case basis. It is not part of a pre-arranged treaty between the insurer and the reinsurer.

A To cover individual, often large, risks that fall outside of a treaty agreement.

B To cover all risks within a specific class of business

C To protect against catastrophic losses across the entire portfolio

D To provide automatic coverage for all risks

E None of the above

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What is the primary purpose of facultative reinsurance?

Solution