Reinsurance is a crucial aspect of the insurance industry, ensuring that insurers are protected against large or unique risks. Facultative reinsurance is a specific type of policy that covers individual risks that fall outside of a company's reinsurance treaties. This can include policies for expensive assets such as jumbo jets or oil rigs. Unlike treaty reinsurance, which covers entire classes of business, reinsurers have the discretion to assess each risk individually. With facultative reinsurance, insurers have the flexibility to tailor their coverage to their specific needs.
