ceding commission

Definition

A fee paid by a reinsurance company to the original issuer of a policy or group of policies being ceded to the reinsurer. This commission covers the cedent's business and administrative costs for issuing the policy (such as the costs of overhead, licenses, etc.). A percentage of the profits from the premiums collected are also included in the ceding commission.

Use ceding commission in a sentence

You should try to make sure that you are not doing anything that the ceding commission will not think is ok.

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The ceding commission was a fee and I wanted to know exactly what the reasoning was behind the creation of the fee.

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CEDING COMMISSION A fee paid by a reinsurance company to the original issuer of a policy or group of policies being ceded to the reinsurer. This commission covers the cedent's business and administrative costs for issuing the policy (such as the costs of overhead, licenses, etc.)

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