Facultative reinsurance means reinsurance of individual risks by offer and acceptance wherein the reinsurer retains the “faculty” to accept or reject each risk offered.
Reinsurance of individual risks at the option of the reinsurer and the Ceding Company, whether under a treaty of reinsurance or by negotiation in respect of an individual risk. The reinsurer is free to accept or reject the offerings of the Ceding Company. The reinsurer may specify its own ratings or terms for the reinsurance.