Page 339 - Misc Ebook IC 78

Miscellaneous Insurance

under consideration is sufficiently large to play the
law of large numbers.

Coinsurance is the additional coverages an insured may
have for a particular risk. For claim settlement for any
of the insured peril, however the principle of contribution
holds good, and he is paid in the rateable proportion of
the sum insureds.

Q3.c) What is Facultative Reinsurance ? Why is it
not very popular now, generally.

Ans. Under facultative reinsurance, it's not obligatory for the
ceding company to cede to any particular accepting
company nor is it obligatory for the accepting company
to accept the ceding.

The accepting company, at its own discretion may reject
the offer or accept only part of the offer. The accepting
company can view the brief particulars of the risk, rates
and terms of acceptance, and the retention of the
ceding company, before deciding the share of
acceptance.

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