Question

What is "Sliding Scale Commission" in the context of pro rata treaty reinsurance?

a.

A commission paid by the reinsurer based on the reinsured's loss ratio

b.

A commission that increases with the loss ratio of the reinsured

c.

A retroactive pricing mechanism for excess of loss reinsurance

d.

A contractual formula where the ceding commission varies inversely to the loss ratio

Posted under IC85 Reinsurance Management

Answer: (d).A contractual formula where the ceding commission varies inversely to the loss ratio Explanation:"Sliding Scale Commission" can be defined as a contractual formula used in pro rata treaty reinsurance. It states that the ultimate ceding commission payable varies inversely to the loss ratio within specified parameters. In other words, as the loss ratio increases, the ceding commission decreases.

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Q. What is "Sliding Scale Commission" in the context of pro rata treaty reinsurance?
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