A ceding commission whose rate moves inversely to the loss ratio actually recorded on the treaty.
A sliding scale commission makes the ceding commission depend on the loss ratio actually recorded: the better the treaty performs, the higher the commission, and conversely. The scale is bounded by a minimum and a maximum, with a balance point around the expected loss ratio, and is settled by successive adjustments as losses develop. The problem it solves is alignment of interest on a proportional treaty: a flat commission pays the cedant the same rate whether it underwrites well or badly, and the reinsurer alone absorbs any drift. By tying remuneration to result, a sliding scale makes the cedant carry part of the consequence of its own underwriting, without turning the treaty into pure retention, since the bounds cap the movement. It is the most common structure on quota shares of volatile lines, and the most debated parameter at renewal: a steep slope hands the cedant much of the result, a shallow one leaves the reinsurer most of the technical risk.
A 2026 cyber quota share carries a provisional commission of 27 percent, sliding between 20 and 35 percent at one commission point per loss ratio point between 50 and 65 percent. The loss ratio comes in at 74 percent at the second adjustment: the commission drops to the 20 percent floor, and the cedant repays 7 points on 41 million euros of ceded premium, that is 2.87 million.
Sliding scale commission, Commission à échelle mobile, Échelle glissante, Sliding scale