Facultative reinsurance is the placement of Reinsurance on an individual risk basis. The Insurer does not have any binding authority and each risk is submitted to reinsurers for quotation sometimes referred to as prior submit. Reinsurers must be formally notified should a quotation be bound prior to any inception date of cover.
Facultative can be transacted on a proportional basis where both the insurer and reinsurer share the premium and the losses or on a non-proportional basis where the reinsurer has an agreed attachment point for losses and a premium which is calculated commensurate with the attachment point. Usual practice is for reinsurance cover to have certain terms and conditions but to largely follow the primary insurers policy so that there is no difference in conditions. There are circumstances where this may differ and this is referred to as “Non Concurrent” coverage, an example of this is first umbrella where an insurer requires difference in conditions cover (DIC) in excess of a self insured retention (SIR).
There are many circumstances which may lead to an insurer purchasing facultative reinsurance.
• Maximum limits have been reached and Increased capacity is required
• Smoothing out portfolio volatility on high exposure type risks
• Constraints in aggregate limits
• Protection of treaty from risks with high volatility
• Protection of the insurers net line on potentially high loss frequency accounts
• Risk falls outside the Reinsurance Treaty Contract
Facultative reinsurance placements are carried out on all lines of business be it property casualty or marine with the professional reinsurance sector (high S&P rated capacity) throughout the world both Property and Casualty classes have a risk appetite for all sizes and classes of business.
Wickshire has the expertise along with excellent long standing relationships with the professional reinsurance sector (high S&P rated capacity) both locally and throughout the world. We identify and access those markets which have a risk appetite for your particular placement and we work with you to ensure that the most appropriate and cost effective cover is purchased. All work is totally confidential and we will facilitate the process according to our previously stated “Value add Services”.