BUSINESS ADMINISTRATION
BANKING AND INSURANCE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Commission on reinsurance ceded is:
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Income
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Expenses
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Liabilities
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None of the above
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Explanation:
Detailed explanation-1: -What Is a Ceding Commission? A ceding commission is a fee paid by a reinsurance company to a ceding company to cover administrative costs, underwriting, and business acquisition expenses. The commission also helps the ceding company offset loss reserve premium funds.
Detailed explanation-2: -Ceding commission is the remuneration paid to the ceding insurer/reinsurer by the assuming reinsurer (either entity could be a captive), compensating the cedent for various expenses that it incurs, such as underwriting and business acquisition expenses.
Detailed explanation-3: -To cede is when a company reinsures its liability with another.
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