Question

What is the purpose of using a sliding scale commission for reinsurance accounting?

a.

Easy calculation and accounting

b.

Reflects the loss ratio of the treaty

c.

Provides flexibility for different types of business

d.

Allows for adjustments based on earned premiums

Posted under IC85 Reinsurance Management

Answer: (b).Reflects the loss ratio of the treaty Explanation:The purpose of using a sliding scale commission for reinsurance accounting is to reflect the loss ratio of the treaty. This method calculates the commission rate based on the percentage that the incurred losses bear to the earned premiums. By considering the actual loss experience of the treaty, the commission rate can be adjusted to align with the performance of the business.

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Q. What is the purpose of using a sliding scale commission for reinsurance accounting?
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