What is it called when a single specific risk is ceded to a reinsurer outside of standard treaty agreements?

The correct term for ceding a specific risk to a reinsurer outside of standard treaty agreements is known as Facultative Reinsurance. This process allows an insurer to obtain reinsurance coverage on an individual risk basis rather than applying a blanket agreement that covers all risks. In other words, when an insurer identifies a particular policy or risk that requires additional coverage, it can negotiate the terms for that specific instance with a reinsurer.

Facultative reinsurance is beneficial because it allows insurers to tailor coverage to unique risks that may not fit within the parameters of existing treaties. This means that the reinsurer has the opportunity to assess individual risks rather than dealing with an automatic reassignment of risks that comes with standard treaty arrangements.

In the context of reinsurance practices, this method provides flexibility for both insurers and reinsurers, enabling them to customize agreements based on the specifics of a risk rather than adhering strictly to a standardized contract.