As per IRDA Cession means the unit of insurance passed to a reinsurer by the insurer which issued a policy to the original insured, and accordingly, a cession may be the whole or a portion of a single risk, defined policies or defined divisions of business, as agreed in the reinsurance contract.

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.