A contract formalizing a reinsurance cession on a specific risk.
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See: “Reinsurance, Facultative Certificate of 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.

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.

Reinsurance by offer and acceptance of individual risks, wherein the reinsurance retains the “faculty” to accept and reject each risk offered by the ceding.

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.

The statistical record showing the premium income and claims attaching to an Insurance, or a Reinsurance, long term contract.

A broad spectrum of treaty reinsurance arrangements that provide reinsurance coverage at lower margins than traditional reinsurance, in return for a lower probability of loss to the reinsurer. This reinsurance is often multi-year and often provides a means of sharing positive or negative claims experience with the cedent beyond that usually provided by traditional reinsurance.

A form of financial reinsurance which provides a defined upper limit to the total amount of payment.

The Federal Insurance Office, established by the Dodd-Frank Act, was created to provide federal oversight of the insurance and reinsurance industries, although FIO does not have regulatory authority. FIO, along with state insurance regulators, participates at the IAIS on international regulatory issues and has the express authority, along with U.S. Trade Representative, to negotiate covered agreements with one or more foreign jurisdictions on prudential matters with respect to the business of insurance or reinsurance. FIO is also tasked with the development of various reports to Congress on insurance issues, including how to modernize the U.S. system of regulation, a report on the global reinsurance market, and a report on the impact of the NRRA on state insurance regulators.

The first amount allocated to reinsurance in excess of the original insurer’s net retention.
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UK: The surplus treaty immediately above the cedant’s retention and to which cessions must be made in priority to all other surplus treaties. The reinsured may arrange second and third treaties and so on.