In calculation of the profit and loss, of the QS contracts, is it the market accepted way to calculate profit commission as PC% * ceded premium ? EG For A at a 65% LR, PC = 2.5% * 70m. Or is this an assumption made in the question? Intuitively I would have thought that it would have been PC% * (ceded premium - insurer recoveries - other expenses paid from RI to cedant)
It's only like this because of the wording of the question (normal commissions are normally expressed as a percentage of the ceded premium). Your intuition is correct.
Hi I see that the question is from a 403 paper. Are questions at that level expected in the SP7 exam?
No reason why not, reinsurance calcs are pretty common in both SP7 and SP8 exams, and the SA3 syllabus is no more demanding in terms of the reinsurance product knowledge.
