Question 1

How does an overriding commission differ from an ordinary ceding commission?

Accepted Answer

Overriding commission rewards an intermediary or managing role, while ceding commission reimburses the cedent's own acquisition costs — Ceding commission compensates the cedent for its own costs of writing the business; overriding commission is a separate payment for an intermediary or managing role such as administering bordereaux or running a pool.

Question 2

In which kind of arrangement is an overriding commission most commonly seen?

Accepted Answer

Retrocession and pooling arrangements where one party performs ongoing administrative work for another — Overriding commissions typically arise where a retroceding reinsurer or pool manager does real ongoing administrative work on behalf of the party paying the commission.

Overriding Commission

The full write-up is free for members

Related terms