Facultative Reinsurance

Is facultative reinsurance typically sold on a single structure or is it flexible enough to accommodate a basket of risks?

Suppose you want to insure a large agricultural operation. There is a $10M building, $5M worth of grain bins, and $35M of grain in those bins. I assume I could purchase fac to lower my building loss exposure to $5M, but could I purchase fac to lower my exposure on all items to $5M?

What if that same operation also had another operation half the size in another state? Will one policy trim $75M of exposure in two locations?

What flexibility is there so I can present the correct scenarios to my peers?

is there a single property policy in place covering all the property on this farm?

Is there anything that ties these policies together? Like the multi-state: is it same owner/entity?

Total guess, but same ownership of all properties, single policy per state - I suspect you could get a facultative placement on them.

you should talk to a property reinsurance broker though for the most accurate answer.

Is this a standard thing for you - to limit total exposure per risk to $5M? How common is it that exposed limit above $5M occurs? (deciding if you need fac or treaty)

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We already have reinsurance to 7.5M per occurrence, but it sounds like there is interest in reducing the per-occurrence volatility. If it were a case of just reducing the exposure on our largest buildings to 5M, I would consider fac because we only have so many of them. But if it’s possible to include all the property exposure on the policy to 5M, we have quite a lot of them and I think I we would want a treaty then.

Maybe I’m better off presenting both scenarios so they’ll know how much business we stand to cede away. 5M per building vs 5M per policy.