CII M97 Practice Questions - CII M97 Reinsurance Exam

Which statement accurately describes Facultative Reinsurance?

It is an obligatory contract covering an entire portfolio of policies automatically. It is negotiated on an individual risk basis, where the ceding insurer is free to offer and the reinsurer is free to accept or decline. It only applies to catastrophic non-proportional loss layers. It requires annual aggregate financial audits before claims can be settled.

Correct Answer:

It is negotiated on an individual risk basis, where the ceding insurer is free to offer and the reinsurer is free to accept or decline.

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