Facultative Reinsurance refers to the reinsurance of which kind of risks?

Facultative reinsurance pertains specifically to the reinsurance of individual risks. In this arrangement, the primary insurer seeks coverage for a specific risk or policy, allowing the reinsurer to evaluate and decide whether to accept or decline that single risk. This contrasts with other forms of reinsurance, such as treaty reinsurance, which covers a portfolio or group of risks under a set agreement.

In facultative reinsurance, the reinsurer can accept or refuse the risk on a case-by-case basis, ensuring they have control over the specific risks they take on. This technique is particularly useful for high-value or unique risks that may not fit easily into a broader protection plan.

The response indicating "None of the above" misrepresents the nature of facultative reinsurance, as it is indeed concerned with individual risks, underlining the importance of understanding the fundamentals of different reinsurance types in the context of the insurance industry.