Liability Insurance Company (LIC) writes a substantial amount of commercial liability insurance. Alarge construction ocompany requests $100 milion of fiabityinsurance to cover its business operations. LIC has a quota-share treaty reinsurance contract with Bermuda Re that enables the coverage to be written immediatelyUnder the terms of the contract, losses and premiums are shared on a 20-80 spit. LIC retains 20% of the premium and pays 20% of the loss.The policy premium is $2,000,000. The ceding commission is $100,000. LIC will retain Sof the premium while Bermuda wil etan sBe sure to properly account for the ceding commission in your responses.of the loss while Bermuda Re would pay SIn the event of a $800,000 covered loss, LIC would pay SIMPORTANT: Your answers should be rounded to the nearest integer and should NOT include symbols (S' or )

●1. Ceding Commission is the commission that the insurance company received to cover the…

Answered: Liability Insurance Company (LIC)…

Business Its Legal Ethical & Global Environment

10th Edition

ISBN:9781305224414

Author:JENNINGS

Publisher:JENNINGS

Chapter12: Contracts And Sales:introduction And Formation

Section: Chapter Questions

Problem 9QAP

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