Facultative Reinsurance

Case by case reinsurance negotiated individually for a specific risk the cedent wants to place.

Overview

Each submission is underwritten on its own facts, offered at a bespoke price, and accepted or declined, unlike treaty automatic flow. Cedents use facultative for risks exceeding treaty limits or falling outside treaty terms, such as a skyscraper, a jumbo jet placement, a stadium event, or a very large life policy. Reinsurers use it to write selective risks without long term portfolio obligations, so premium rates run richer than treaty to cover the friction. Because each deal costs time and money on both sides, it stays a niche tool for the unusual and the oversized. Hybrid forms common in life reinsurance obligate the cedent to offer every case above a threshold while leaving acceptance separate.