Page 52 - Reinsurance Management IC85
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Reinsurance Management
extinguished. Profit commission is payable only
when the cumulative result of the treaty shows a
profit.
This method is useful in balanced portfolios where the
results may not get even under a three year average
system.
The profit commission can be an agreed percentage
of the treaty profit on any of the above three has or
on a sliding scale providing for higher the profit ratio
under the treaty higher the percentage of profit
commission.
Q. a. Explain briefly the Premium Reserves
Clause in a treaty.
b. Discuss the methods of “valuation of
portfolios” to determine reinsurance
premium.
Ans: a. The Premium Reserves Clause provides for
retention of a proportion of the ceded premium
by the company against the reinsurer's discharge
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