GENERAL KNOWLEDGE

Detailed explanation-1: -With facultative reinsurance, the reinsurer can review the risks involved in an insurance policy and either accept or reject them. But the reinsurer in a treaty reinsurance policy, on the other hand, generally accepts all the risks involved with certain policies.

Detailed explanation-2: -Treaty Reinsurance means that the ceding company and the reinsurer negotiate and execute a reinsurance contract under which the reinsurer covers the specified share of all the insurance policies issued by the ceding company which come within the scope of that contract.

Detailed explanation-3: -direct and facultative means direct business of insurance and inwards facultative business of reinsurance.

Detailed explanation-4: -Treaty reinsurance represents a contract between the ceding insurance company and the reinsurer who agrees to accept the risks of a predetermined class of policies over a period of time. When insurance companies underwrite a new policy, they agree to take on additional risk in exchange for a premium.