In reinsurance, the primary insurance company usually pays the reinsurer its proportion of the gross premium it receives on a risk.
The reinsurer then allows the company a ceding or direct commission allowance on such gross premium received, large enough to reimburse the company for the commission paid to its agents, plus taxes and its overhead.
The amount of such allowance frequently determines profit or loss to the reinsurer.
Alternative
Fee paid to an agent or insurance salesperson as a percentage of the policy premium. The percentage varies widely depending on coverage, the insurer, and the marketing methods.