Different than treaty reinsurance (where a group of policies or risk categories are covered together,) facultative reinsurance is designed to cover a specific policy. This type of reinsurance is generally used for "unusual" types of policies that may require some sort of special coverage. It is a type of insurance that is highly specialized and is specifically designed to ensure that insurance companies have the ability to cover their policies.
Similar to treaty reinsurance, users can also copy an existing treaty to a new treaty, edit and / or delete a treaty. All of the contract information and at least one (1) layer is needed to save the facultative contract.
From the Company Configuration Tool / Reinsurance Tree View, select Facultative; click Add to display the Add Contract screen.
On the Add Contract screen, make the following entries and selections:
Certificate Number: Enter the contract number.
Lead Reinsurer: Select from the combo box. This is populated by the information entered on the Reinsurer / Broker screen.
Broker: Select from the combo box. This is also populated by the information entered on the Reinsurer / Broker screen.
Termination Method: Method in which contract will be terminated as stated in the conditions of the contract; select from the combo box.
Status: The current position of the contract in question; select from the combo box.
Limit: Enter the maximum amount of liability of the reinsurer.
Effective Date: The date the treaty begins; format entry M/DD/YYYY.
Expiration Date: The date the treaty ends; format entry M/DD/YYYY.
Expansion Date: Time limit amount over and above the Expiration Date the contract would be extended to; defaults to the Expiration Date but can be changed.
To split the reinsurance contract into different
layers for different limits, click the Add
button in the Layers section:
On the Treaty Layer screen:
Layer Number: Number of layers in an excess loss agreement / session over and above the insurer's retention.
Contract Type: Select the type of contract from the combo box.
Layer Retention: This amount represents the layer amount of loss reinsurance protection a company needs to protect a specific set of exposures not usually written in one contract. This is the insuring company's participation level; dollar amount.
Layer Limit: Reinsurer's limit on the treaty; dollar amount.
Reinsurer Liability: Amount of liability per each reinsurer within that layer.
Once the contract and a layer has been entered and saved, users may then add Policy Information to the contract. From the Edit Contract screen, click Add in the Policy Information section.
Two (2) Search Methods can be used: By Policy Number or by Policyholder Name.
Next, beneath each layer of the contract, users have the option to add participants as well as coverages for the policy under the contract. Each participant agrees to accept a percentage of or ALL of the layer risks within the contract. In the Layers section on the Edit Contract screen:
Reinsurer Name: Select; this is populated by the information entered on the Reinsurer / Broker screen.
Layer Percent: The percentage of liability divided by the total reinsured layer.
Ceded Premium: Dollar amount; enter the premium paid to the reinsurer for that company accepting all or part of insurance on the risk or exposure.
At the bottom of the Facultative Layer screen, coverages can then be applied. The coverages are stated per policy they cover. The policy information for facultative coverages are directly related to the policy information added under the contract. (Note: If a policy is NOT set up, then no coverages are presented here.) Click Add.
When finished, select Save. Coverages are displayed on the Facultative Layer screen. Continue to select Save on the remaining screens.
Special Note: Policy Information, Participants, Layers and coverages can be edited and / or deleted.
To copy an existing contract to a new contract:
Highlight the existing contract in the Contracts List View screen.
Select Copy at the top of the toolbar.
When the Add Contract screen displays with the contract being copied from make any necessary changes, such as Contract Name, Certificate Number, Limit, Lead Reinsurer, etc.
Add or Edit Policy Information.
Make any changes to the Layer assigned to the reinsurer being copied from, click Edit.
Make your changes on the Facultative Layer screen.
Click Save to retain your changes.
Once all new information has been entered, click Save once again to place the "new" or "copied" reinsurer on the Contract List View screen.
To edit a contract:
Highlight the contract in the Data Grid.
Select Edit.
When the Edit Contract screen displays, make your changes.
Click Save.
To delete a contract:
Highlight the contract in the list view.
Select Delete.
No prompt is returned; the contract is removed from the Data Grid.