Question

What is profit commission?

a.

A further commission agreed by the reinsurer to the ceding insurer if the results under a treaty are profitable

b.

A commission paid by the ceding insurer to the reinsurer if the results under a treaty are profitable

c.

A commission paid by the ceding insurer to agents and brokers

d.

A commission paid by the reinsurer to agents and brokers

Answer: (a).A further commission agreed by the reinsurer to the ceding insurer if the results under a treaty are profitable Explanation:Where the results under a treaty are profitable, the reinsurer may agree a further commission called a profit commission. By this method, a percentage of the profits of the treaty for the treaty year are returned to the ceding insurer.

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Q. What is profit commission?

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