https://www.insurerbrain.com/w/index.php?action=history&feed=atom&title=Definition%3ACeding_commission 2026-04-29T16:52:40Z Revision history for this page on the wiki MediaWiki 1.43.8 https://www.insurerbrain.com/w/index.php?title=Definition:Ceding_commission&diff=6737&oldid=prev 2026-03-10T04:44:21Z

<p>Bot: Creating new article from JSON</p> <p><b>New page</b></p><div>💵 &#039;&#039;&#039;Ceding commission&#039;&#039;&#039; is a fee paid by a [[Definition:Reinsurance | reinsurer]] to the [[Definition:Cedent | cedent]] under a [[Definition:Proportional reinsurance | proportional reinsurance]] arrangement, designed to compensate the ceding insurer for the [[Definition:Acquisition cost | acquisition costs]], [[Definition:Underwriting | underwriting]] expenses, and administrative overhead it incurred in originating the business that is being transferred. In essence, when a primary [[Definition:Insurance carrier | insurer]] cedes [[Definition:Premium | premiums]] and risk to a reinsurer, the ceding commission flows back as recognition that the cedent did the work of sourcing, pricing, and binding the underlying [[Definition:Policy | policies]].<br /> <br /> 🔢 The commission is typically expressed as a percentage of the [[Definition:Ceded premium | ceded premium]] and is negotiated during the placement of each [[Definition:Reinsurance | reinsurance]] treaty. Under a standard [[Definition:Quota share reinsurance | quota share]] arrangement, a ceding commission of 25–35 percent is common, though the exact figure reflects factors like the historical [[Definition:Loss ratio | loss ratio]] of the portfolio, the perceived quality of the cedent&#039;s [[Definition:Underwriting | underwriting]], and prevailing market conditions. Some treaties feature a [[Definition:Sliding scale commission | sliding scale commission]] that adjusts up or down based on actual loss experience — rewarding the cedent with a higher commission when results are favorable and reducing it when losses mount.<br /> <br /> 📊 For cedents, the ceding commission is not merely an administrative reimbursement — it is a meaningful revenue component that can determine whether a line of business is profitable after reinsurance costs. A generous commission effectively lowers the cedent&#039;s [[Definition:Net cost of reinsurance | net cost of reinsurance]], improving the [[Definition:Combined ratio | combined ratio]] on ceded business. Conversely, in a hardening [[Definition:Reinsurance market | reinsurance market]] where reinsurers tighten terms, shrinking ceding commissions can pressure the cedent&#039;s margins and force difficult decisions about [[Definition:Risk retention | retention]] levels or [[Definition:Premium | pricing]] strategy.<br /> <br /> &#039;&#039;&#039;Related concepts&#039;&#039;&#039;<br /> {{Div col|colwidth=20em}}<br /> * [[Definition:Cedent]]<br /> * [[Definition:Ceded premium]]<br /> * [[Definition:Quota share reinsurance]]<br /> * [[Definition:Sliding scale commission]]<br /> * [[Definition:Proportional reinsurance]]<br /> * [[Definition:Acquisition cost]]<br /> {{Div col end}}</div>

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