Why it is used
Treaties provide efficient portfolio capacity, while facultative placements can add capacity or expertise for exceptional risks.
Reinsurance Intelligence · Placement structure
All conceptsFacultative vs Treaty
Treaty reinsurance covers a defined portfolio automatically; facultative reinsurance is considered risk by risk.
Illustrative example
A property treaty supports ordinary factory risks, while a very large refinery is submitted separately to facultative markets.
Programme questions
- Treaty scope and exclusions
- Facultative attachment before the original risk is bound
- Data consistency between original and reinsurance placements
Educational overview only. Reinsurance effect depends on the complete contract, programme structure, accounting basis, law, facts, and counterparties. The original insurer normally remains responsible to its policyholder.