Facultative non-proportional reinsurance and obligatory treaties
There are differing views as to how facultative non-proportional reinsurance cover should be combined with proportional reinsurance treaties.
Reinsurers often sell non-proportional facultative covers which use the proportional treaty limit as the basis for non-proportional cover. But to prevent unpleasant surprises to both parties in the event of a loss, cessions to proportional treaties must be based on the original risk.
The brochure explains how proportional treaties should interact with non-proportional facultative covers and aims to counter misunderstandings regarding so-called "treaty-compressions".
