As per IRDA’s General Insurance-Reinsurance Regulations, 2000 “Facultative” means the reinsurance of a part or all of a single policy in which cession is negotiated separately and that the reinsurer and the insurer have the option of accepting or declining each individual submission.

A series of financial tests developed by the National Association of Insurance Commissioners (NAIC) under its Insurance Regulatory Information System (IRIS) to assist states in overseeing the financial soundness of insurance companies.

A clause inserted in a treaty wording defining the laws under which any dispute shall be resolved.
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A clause in an insurance or reinsurance contract which states to which territory’s courts any contractual dispute shall be referred for resolution.

The Ceding office retains the bottom layer of risk itself and the Reinsurer only have to pay claims above this level. For example, if the cedant had retained Rs. 1,00,000 of a Rs. 10,00,000 risk, the cedant would bear the first Rs. 1,00,000 of each and every loss and the Reinsurers would pay only that part of any claim in excess of Rs. 1,00,000.
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An arrangement whereby two or more Insurers each provide a rupee amount of Insurance coverage, or layer. The Insurer of the first layer is primary, thus responding first in covering a loss above any retention by the insured. Insurers of subsequent layers respond in sequence, as necessary, to cover any large loss. Layers are used in both property and liability Insurance. Also, See Also: “Layering, Reinsurance.”

The reinsurer who negotiates the terms, conditions and premium rates and first signs on to the slip. Reinsurers who subsequently sign on the slip under those terms and conditions are considered following reinsurers.

(i) Particular type of Insurance, such as the liability “line.” (ii) All types of Insurance written for a property owner, such as all lines for ABC Manufacturing. (iii) Amount of Insurance on a given property, such as a Rs. 10,00,000 line on XYZ manufacturing’s building. (iv) Gross line-total amount of Insurance accepted by an insure on individual risk, including the amount Reinsured. (v) Net Line: amount of coverage retained by the Ceding Insurer on an individual risk in a surplus Reinsurance treaty or the maximum amount of loss on a particular risk to which an Insurer will expose itself without Reinsurance.

A schedule included in a reinsurance treaty contract showing the limits of liability to be written by a ceding company for different classes of risk and (usually) also showing the amount of each respective limit (stated as a number of “lines”) which can be ceded to proportional reinsurance treaties.