The Insurance Regulatory and Development Authority of India vide notification dated 10th January, 2022 has clarified the manner of sharing of profit commission by Indian Re-insurers and other applicable insurers as per the provisions of Section 101A of the Insurance Act, 1938. The Indian Re-insurer shall share the profit commission, on 50%:50% basis, with the ceding insurer based on the performance and surplus of the total obligatory portfolio of the ceding insurer, after factoring the following:
i) Incurred loss % (to be worked at the end of 3 financial years).
ii) Management Expenses at 2%.
iii) Profit at 5%.
iv) Commission at 15%.
v) Loss ratio at 50% to 78%.
No profit commission is payable if the loss ratio exceeds 78%. Profit commission shall not exceed 14%.
