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Profit commission

UK: A commission based upon a pre-defined formula intended as an incentive and reward. Examples are: (a) the commission received by an underwriting agent from the syndicate members at Lloyds as a reward for profits; (b) the commission received by a cedant from a reinsurer as a reward for the ceding of profitable business.
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REINSURANCE: A commission feature whereby the cedent is allowed a commission based on the profitability of the reinsurance contract after an allowance for the reinsurer’s expense and profit margin.
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A provision found in some reinsurance agreements that provides for profit sharing. Parties agree to a formula for calculating profit, an allowance for the reinsurer’s expenses, and the cedant’s share of such profit after expenses. See Adjustable Features, Risk Charge, and Experience Refund.
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UK: at Lloyd’s, remuneration received by an underwriting agent based on the results of a year’s underwriting (but see also contingent commission).
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REINSURANCE: Commission paid by a reinsurer to a ceding office under a proportional reinsurance treaty that is dependent upon the profitability of the total business ceded during each accounting period. Also used, in other arrangements, as any commission contingent on the claims experience.

Profit Commission or Contingent Commission

An additional commission payable by the Reinsurers to the Ceding Company as a percentage of profits derived from the business. It is a pre-determined percentage of the reinsurer’s net profits after a charge for the reinsurer’s overhead, derived from the subject treaty.Overriding Commission : Commission payable in addition to the original commission particularly under retrocession treaties.Sliding Scale Commission : A ceding commission which varies inversely with the loss ratio under the reinsurance agreement, the scales are not always one to one; for example, as the loss ratio decreases by 1%, the ceding commission might increase only 5%.Super Profit Commission : Overriding profit commission payable in addition to the original profit commission particularly under retrocession and/or reciprocal treaties.Reinsurance, Commission Reinsurance Intermediary : (a) Agent’s commission: A percentage of premium paid to an agent for insurance placement services (b) Brokerage: A percentage or a fee paid to a broker for insurance or reinsurance placement services.

Profit Margin

As a pricing factor (along with expenses and losses) the return the reinsurer expects from the degree of net risk taken. As with any investment, the reinsurer expects a larger return from risky than safe investments.

Profit sharing plan (Pensions)

A type of plan wherein certain employees of a company share in a portion of the company’s profits. This portion of the profits is set aside and may be distributed immediately, or may be distributed at a later date, for example, at retirement, death, or termination. This type of plan may qualify for tax exemptions as outlined in the Internal Revenue code.

Profit Testing

A term used for evaluating the economic value of contracts using net present value techniques i.e., proposed premium rates are tested by projecting possible levels of future business, claims, expenses, investment experience and profit. The process may be extended to include all business and so form a model office akin to those used in life companies.

Proforma

When used with the title of a document, the term refers to an informal document presented in advance of the arrival, or preparation of the required document, in order to satisfy a customs requirement.

Program for Evaluating Payment Patterns Electronic Report (PEPPER)

Electronic data report containing hospital-specific data for a number of problem areas identified by the Centers for Medicare and Medicaid Services (CMS) at high risk for payment errors such as specific DRGs and discharges. PEPPER data allow hospitals to compare their performance to other short-term, acute care prospective payment system hospitals as a means of reducing and preventing payment errors.