Not every risk fits neatly under an automatic treaty. Facultative reinsurance is negotiated separately for an individual risk or a small group of risks. The ceding company offers the risk, and the reinsurer is free to accept or decline and to set its own terms.

Facultative placements are used for high-value property, unusual liability exposures, or risks excluded from treaty coverage. Each placement requires a submission, underwriting review, and a facultative certificate or offer. Pricing and conditions reflect the specific characteristics of the risk.

The process is more labor-intensive than treaty reinsurance but provides flexibility and additional capacity when needed. Cedents must allow time for the negotiation before binding the original policy. Clear communication of the underlying terms and of any changes is essential to avoid gaps or disputes.

• Reinsurance negotiated risk by risk
• Reinsurer may accept or decline each offering
• Used for large or unusual exposures
• More flexible but administratively heavier than treaty