Question

What does the ceding commission in reinsurance include?

a.

Reinsurer's profit margin

b.

Reinsurer's acquisition cost and administration expense

c.

Reinsured's profit margin

d.

Reinsured's acquisition cost and administration expense

Posted under IC85 Reinsurance Management

Answer: (b).Reinsurer's acquisition cost and administration expense Explanation:The ceding commission in reinsurance includes a percentage of the reinsurance premium paid by the reinsurer for part or all of the reinsured's acquisition cost and administration expense. It may also include an element of profit to the reinsured.

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Q. What does the ceding commission in reinsurance include?
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