What is facultative obligatory reinsurance?

Facultative obligatory reinsurance is a hybrid form of reinsurance where the primary insurer has the option to cede specific risks to a reinsurer, but the reinsurer is obligated to accept the risks if the primary insurer chooses to do so. This arrangement combines elements of facultative reinsurance, where coverage is negotiated for individual risks, and obligatory reinsurance, where certain terms are mandated. It allows for flexibility in risk management while ensuring that the reinsurer must accept the ceded risks once the primary insurer opts to transfer them. This can help primary insurers manage their exposure more effectively.