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What distinguishes a facultative reinsurance arrangement from a treaty arrangement?

Facultative covers an entire portfolio automatically; treaties cover individual risks Facultative is negotiated risk-by-risk; treaties cover a defined class of business automatically Facultative requires regulatory approval; treaties do not Facultative is only used for life insurance; treaties apply to property lines

Correct Answer:

Facultative is negotiated risk-by-risk; treaties cover a defined class of business automatically

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