Reinsurance Operations
Ceding Commission
Definition
Commission paid by the reinsurer to the cedent on proportional treaties to compensate for acquisition costs and expenses.
Practical Example
30% ceding commission on a quota share treaty.
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Related Terms
Treaty Structures
Sliding Scale Commission
A ceding commission that varies based on loss experience, incentivizing the cedent to maintain profitable underwriting.
Treaty Structures
Profit Commission
Additional commission paid to the cedent when a proportional treaty produces underwriting profit for the reinsurer.