Australia
Facultative Reinsurance

Facultative Reinsurance

Aon Benfield facultative reinsurance capabilities offer improved protection for your net exposures through the use our extensive capability to purchase facultative reinsurance in domestic and global markets.

Quota Share Reinsurance

  • Reinsurer's percentage (quota) of premium and losses by line(s) of busines
  • Defined for all risks covered by the contract (portfolio)
  • Pricing by commission

Primary Reinsurance
Reinsurance for the primary layer of risk.

Excess of Loss Reinsurance

  • Reinsurer takes on losses between a lower (deductible) and an upper threshold and pays only when the loss exceeds the deductible
  • Broadly divided into:

    > Per-risk coverage
    > Per-event (e.g., natural catastrophes) coverage

Carve Outs (catastrophe, individual perils, individual risks)
Addresses the specific piece of the portfolio that has a greater risk vs. the remaining lines

Stop Loss/Aggregate Protections

  • Same principle as XL. The protection does not apply to each risk but to the global portfolio for a specific event
  • Designed for direct insurers seeking comprehensive protection against fluctuations in their annual loss experience in a given class of business

Deductible Buy-backs or Buy-downs
A deductible which may be removed by payment of additional premium when full coverage is required.

Individual Risk Facility
When reinsurance is purchased for an individual risk either by layer, peril, or location.

Individual (Spot) Facility
When reinsurance is purchased to cover one location of a given risk. If there is a large schedule of locations, there may be one or two locations which are not up to the underwriting standards of the carrier.
In situations where CAT exposures which drive up the portfolio risk of the ceding company and/or push the cedant above their allowable aggregates for the year.  In these instances, an underwriter may want to purchase reinsurance to take the exposures from the portfolio.

Semi-Automatic Facilities
When reinsurance is purchased on a facility basis to cover a ceding company’s exposures.
The key to it being semi-automatic is that there is usually a pre-defined layer, pre-defined rating matrix, master contract applying to many risks, and most importantly, the reinsurer has “right of refusal.” This means that the reinsurer can refuse a risk into the facility  (unlike an automatic facility or treaty).

Automatic Facility
No “right of refusal” aspect for the reinsurer. The company decides which risks to declare, and the reinsurer must accept all risks declared as defined by the contract.

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