What Does Facultative Obligatory Treaty Mean?

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What does Facultative Obligatory Treaty mean? Read on to discover the definition & meaning of the term Facultative Obligatory Treaty - to help you better understand the language used in insurance policies.

Facultative Obligatory Treaty

Facultative Obligatory Treaty

The hybrid between the facultative versus treaty approach. It is a treaty under which the primary insurer has the option to cede or not cede individual risks. However, the reinsurer must accept any risks that are ceded.

We hope the you have a better understanding of the meaning of Facultative Obligatory Treaty.

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