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  • Loss-Aggregate Part IV

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    This document outlines a simple profit commission example where the insurer will pay a 50% profit commission to the reinsurer if losses are less than 60% of premiums collected. With an expected loss ratio of 70%, contract premium of $1, and ceding commission of 30%, the expected cost to the insurer is negative $0.10, so no profit commission would be expected.

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    Loss-Aggregate Part IV

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    This document outlines a simple profit commission example where the insurer will pay a 50% profit commission to the reinsurer if losses are less than 60% of premiums collected. With an expected loss ratio of 70%, contract premium of $1, and ceding commission of 30%, the expected cost to the insurer is negative $0.10, so no profit commission would be expected.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
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    Download as ppt, pdf, or txt
    5 views1 page

    Loss-Aggregate Part IV

    Uploaded by

    Blimundo
    This document outlines a simple profit commission example where the insurer will pay a 50% profit commission to the reinsurer if losses are less than 60% of premiums collected. With an expected loss ratio of 70%, contract premium of $1, and ceding commission of 30%, the expected cost to the insurer is negative $0.10, so no profit commission would be expected.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as ppt, pdf, or txt
    of 1

    Simple Profit Commission

    Example
    Profit Commission: 50% after 10% reinsurers Margin
    Ceding Commission = 30%
    Loss ratio must be less than 60% for us to pay a profit

    commission
    Contract Expected Loss Ratio = 70%
    $1 Premium - $0.7 Loss - $0.3 Comm - $0.10 Reins
    Margin = minus $0.10
    Is the expected cost of profit commission zero?

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