How to record reinsurance ceding commission
Recording the commission income earned by an MGA for placing and managing a reinsurance treaty on behalf of a primary carrier.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Reinsurance Premium Payable | Liability | 5,000.00 | - |
| Ceding Commission Income | Revenue | - | 5,000.00 |
💡 Accountant's Note
In a fronting or reinsurance arrangement, the MGA may withhold a ceding commission from the premiums being remitted to the reinsurer to cover administrative and acquisition costs.
Practitioner & Systems Framework
💻 ERP Architecture
Set up as a 'contra-liability' or direct reduction of the reinsurance premium payable in the settlement module.
⚠️ Audit Flags
Inconsistency between the ceding commission rate in the treaty and the actual amounts withheld.
📄 Required Documentation
Reinsurance treaty agreement and monthly bordereau statement.
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Discussion & Community Questions
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