Question

How is the ceding commission calculated?

a.

By applying the agreed percentage on the ceded premium as set out in the treaty slip and agreed

b.

By applying the same percentage as the reinsurance premium on the original premium paid by the insured

c.

By deducting the original commissions and brokerages from the reinsurance premium

d.

By adding the acquisition cost and the costs of keeping the business on the books to the reinsurance premium

Posted under IC85 Reinsurance Management

Answer: (a).By applying the agreed percentage on the ceded premium as set out in the treaty slip and agreed Explanation:The ceding commission is calculated on the ceded premium by applying the agreed percentage as set out in the treaty slip and agreed. This is incorporated in the treaty document.

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