Facultative reinsurance is arranged for an individual risk or specified portion of it, with separate acceptance by the reinsurer. It is often used for unusually large or complex risks or exposures outside treaty reinsurance terms. Both the ceding insurer and reinsurer evaluate the proposed placement.
A major industrial or hydropower project in Nepal may require a placement tailored to its size and hazards. The customer still needs to understand the original insurance policy and declared values. Reinsurance acceptance alone does not establish that every loss affecting the project is covered under the customer's contract.