Page 329 - Reinsurance Management IC85

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for insurance placement services.

Brokerage - A percentage or a fee paid to a broker for insurance
or reinsurance placement services.

Ceding Commission - A percentage of the reinsurance premium
paid by the reinsurer for part or all of a reinsured" s acquisition
cost and administration expense. The ceding commission may also
include an element of profit to the reinsured.

Overriding Commission -

a) An incremental commission paid on a retrocession of a
reinsurance.

b) Paid to compensate an existing agent for premium volume
produced by other agents in a given geographic territory.

Commutation Clause

A clause which provides for complete discharge of all obligations,
including future obligations, between the reinsured and his
reinsurer by an estimated settlement of all losses incurred and
outstanding.

Cover Note

This is a statement in writing indicating that coverage is in place.
In reinsurance this is also evidenced by the Slip.

Cut-Through Clause

This clause provides that in the event of the reinsured's insolvency
any part of a loss covered by reinsurance be paid directly to the
original insured by the reinsurer. This is an exception to the
legality of privity of contract.

Deposit Premium

This arises when the actual premium awaits the outcome of the
completion of the treaty or contract period. At inception the

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