The portion of ceded unearned premium that is expected to return as commissions to the cedant is called surplus aid. If you think of the mechanics of the income statement, ceded premium reduces premium and income, while ceding commission increases them. And income feeds into surplus, so it is called "surplus aid."
Surplus aid = ceding commissions ratio * sum of unearned premium - Non-Affiliates. Why reinsurance premium ceded to affiliates are counted in calculating ceding commission ratio but the UEP only counts non-affiliates??
Yes, it does look like a blatant incongruency. Odomirok's Appendix I has a section for calculating IRIS ratios. They simply state this calculation in this form and move on. This says to me there isn't an easy way to find out about this.
Comments
The portion of ceded unearned premium that is expected to return as commissions to the cedant is called surplus aid. If you think of the mechanics of the income statement, ceded premium reduces premium and income, while ceding commission increases them. And income feeds into surplus, so it is called "surplus aid."
Surplus aid = ceding commissions ratio * sum of unearned premium - Non-Affiliates. Why reinsurance premium ceded to affiliates are counted in calculating ceding commission ratio but the UEP only counts non-affiliates??
Yes, it does look like a blatant incongruency. Odomirok's Appendix I has a section for calculating IRIS ratios. They simply state this calculation in this form and move on. This says to me there isn't an easy way to find out about this.