Q 2016 Spring 18 A
I would like to clarify some language being used in the examiner's report (in my opinion somewhat confusing).
In this part...
Property Reinsurance Assumed Commissions = Property Net Commissions – Property Gross
Commissions + Property Ceded Commissions = 10,000 – 13,000 + 5,000 = 2,000
Property Gross Commissions = 13k. This 13k falls under the DIRECT column in the P&C extract in the question.
Just underneath this equation the solution continues with...
Total Commission Expense = Total Deferred Commissions at beginning of year + Total Direct
Commissions + Total Reinsurance Assumed Commissions – Deferred Commissions end of year =
30,000 + 23,000 + 3,000 – 35,000 = 21,000
Total Direct Commissions = 23k. This also falls under the DIRECT column.
So, is it safe to assume that GROSS = DIRECT ?
If my question doesn't make sense, please let me know. I can elaborate. Basically, they used gross in one equation, then used direct in another equation but both seem to mean the same thing.
Comments
Good question. The first "gross" should really be "direct" in my opinion. The rest of formulas appear to be correct.
Thank you