Definitions for "Profit Commission"
An allowance payable to the CEDING COMPANY in addition to the normal CEDING COMMISSION, based on a predetermined percentage of the REINSURER's net profits after a charge for the reinsurer's overhead, which is derived from the subject treaty. Also CONTINGENT COMMISSION.
A provision found in some reinsurance agreements which provides for profit sharing. Parties agree to a formula for calculating profit, an allowance for the reinsurer's expenses, and the ceding company's share of such profit after expenses. See Risk Charge and Experience Refund.
A commission payable on the profit generated under an insurance or reinsurance contract as an encouragement to maintain the flow of profitable business.