A form of property and casualty reinsurance that is a hybrid between facultative and treaty. A bordereau of risks ceded is submitted to the reinsurer that has limited rights to decline individual risks.
Insurance Encyclopedia
Facultative Certificate of Reinsurance
A contract formalizing a reinsurance cession on a specific risk.
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See: “Reinsurance, Facultative Certificate of Reinsurance “
Facultative Obligatory Reinsurance
The Ceding Company is not bound’ to automatically cede to the treaty but has the right of making cessions, where it chooses to do so. the Reinsurer, for his part undertakes to accept all the cessions, within the limits of a certain number of lines and/or a maximum amo unt.
Facultative obligatory treaty
a contract for reinsurance whereby the ceding company may cede risks of any agreed class which the reinsurer must accept if ceded
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Fac-oblig’ allows the cedant to select the risks he offers to the reinsurer who must then accept all cessions within the treaty. It is normally arranged after a surplus treaty and provides automatic facultative cover for the cedant when the surplus treaty capacity is full. It differs from a second surplus treaty only in that the cedant has a choice.
Facultative Obligatory Treaty (also known as Facultative Semi-Automatic Treaty, Facultative Semi-Obligatory Treaty)
A reinsurance contract under which the ceding company can select and the reinsurer is obligated to accept cessions of risks of a defined class, provided the risks fall within the contract guidelines.
Facultative or Specific Reinsurance
Reinsurance by offer and acceptance of individual risks, wherein the reinsurance retains the “faculty” to accept and reject each risk offered by the ceding.
Facultative reinsurance
A separate reinsurance agreement that is negotiated for a particular risk or insurance policy. The cedant has the option (faculty) of submitting and the reinsurer has the option of accepting or declining individual risks.
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REINSURANCE: Reinsurance of individual risks by offer and acceptance wherein the reinsurer retains the ability to accept or reject and individually price each risk offered by the ceding company.
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UK: Reinsurance on an individual risk basis; the cedant offers the reinsurance to a reinsurer who may accept or decline as he is not bound by a treaty. See FACULTATIVE OBLIGATORY TREATY.
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UK: the reinsurance of risks on an individual basis (contrast treaty reinsurance).
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MEDICAL,USA: Type of reinsurance of an individual risk at the option (the “faculty” either to accept or reject) of the insurance company requiring reinsurance.
Facultative reinsurance (Reinsurance)
Reinsurance in which the reinsurer has the right to accept or reject each policy presented to him or her by the insurance company.
Facultative risk
A reinsurance risk that is placed by means of separately negotiated contract as opposed to one that is ceded under a reinsurance treaty.
Facultative Treaty
A contract setting out how facultative reinsurance shall be handled by an insurer and a reinsurer.
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A reinsurance contract under which the ceding company has the option to cede and the reinsurer has the option to accept or decline individual risks. The contract merely reflects how individual facultative reinsurances shall be handled.