Insurance Awareness - Reinsurance
Which of the following best explains the concept of 'facultative reinsurance'?
Which of the following best explains the concept of 'facultative reinsurance'?
hard Q9 of 15
Step-by-Step Solution
Step 1: Understand facultative reinsurance
Facultative reinsurance is arranged for individual risks on a case-by-case basis after evaluation by the reinsurer.Step 2: Analyze options
An automatic agreement covering all risks in a portfolio describes treaty reinsurance. Reinsurance that does not require premium payment is incorrect as premiums are always paid. A government-mandated reinsurance scheme is unrelated to facultative reinsurance.Final Answer:
Reinsurance arranged for a specific individual risk after insurer's assessment → Option AQuick Check:
Facultative is selective and specific, unlike treaty.
Quick Trick: Facultative = selective individual risk cover.
Common Mistakes:
MISTAKES- Confusing facultative with treaty reinsurance.
Master "Reinsurance" in Insurance Awareness
Start learning the concept with an interactive lesson.
Want More Practice?
15+ quiz questions · All difficulty levels · Free
Free Signup - Practice All QuestionsMore Insurance Awareness Quizzes