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Insurance vocabulary · Reinsurance

Facultative reinsurance

Meaning in insurance, with examples

nounAdvanced term

In insurance, facultative reinsurance means: Reinsurance arranged separately for one specific risk, such as a large factory, where the reinsurer can accept or decline each case.

In Turkish: fakültatif reasürans, ihtiyari reasürans

How it is used

Used for risks that are too large or unusual for the treaty. Often shortened to 'fac': 'We need fac support for this refinery.' Underwriters send fac submissions to reinsurers and wait for their shares.

Example sentences

  1. The power plant exceeded our treaty limit, so we placed it with facultative reinsurance.

  2. Facultative reinsurance gives the reinsurer a chance to study each risk in detail.

Common collocations

  • facultative placement
  • fac support
  • facultative capacity
  • buy facultative cover
  • reinsuranceInsurance bought by insurance companies to pass part of their risks to another company, so that very large or numerous losses do not threaten them.
  • treaty reinsuranceA reinsurance agreement that automatically covers a whole group of an insurer's policies, such as all its property business, for a set period.
  • reinsurerA company that insures insurance companies, accepting part of their risks in return for part of the premium.
  • retentionThe part of a risk or loss that an insurer keeps for its own account instead of passing it to reinsurers.

More terms: Reinsurance

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This page explains English vocabulary for learners. It is not financial advice.