A rating method under which the insured’s premium depends upon the insured’s own loss experience subject to minimum and maximum premium constraints. Usually used in Group Mediclaim and Group Personal Accident Policies. In a similar yet different approach a provisional premium is paid at the beginning of the policy period and at the end of the period a final premium is computed based on the actual loss experience during the period. It is also widely used for Workmen’s (Employee’s) Liability Insurance, Liability Insurance policies, Motor Act only Policy, Property damage and Burglary Policy for large firms.
Insurance Encyclopedia
Retrospective payment audit
See: retrospective review .
Retrospective premium
The last premium paid on a retrospective rating plan.
Retrospective premium agreement
Contract in which the policyholder pays the insurance company for any deficiencies incurred when the insurer agrees to continue coverage at a premium rate that eliminates any rise and fall in claims.
Retrospective Premiums
Premiums dependent on loss experience during the year.
Retrospective rate derivation (Health Insurance)
A type of rating system wherein an employer pays a fraction of the employee’s cost for health care. The insurer may have to refund some of the money paid, if the costs for health care turn out to be less than the amount the employer has agreed to pay.
Retrospective rate derivation / Retro
See: retrospective rating (retro) .
Retrospective Rating
REINSURANCE: A plan or method which permits adjustment of the final reinsurance ceding commission or premium on the basis of the actual loss experience under the subject reinsurance treaty – subject to minimum and maximum limits
***
A rating arrangement in which the final premium for insurance coverage is not determined until all claims are closed. The final premium is determined by the insured’s actual loss experience during the policy period. Such adjustments include additional premiums, experience refunds, and for multiple year contracts, early termination penalties, or changes to coverage in subsequent years.
***
UK: A system when the rate to be charged for the (re)insurance is determined at the expiry of the policy taking account of the experience during the policy period subject to a maximum and minimum premium.
***
A type of plan sometimes used when the insured is a large entity. Under this type of plan, the final premium of a policy is not calculated until close to the end of the coverage period. The final premium is calculated, within a certain maximum and minimum, based on the insured’s actual loss experience for the period that just passed.
Retrospective Rating (also known as Self Rating, Swing Rating)
See: Rating.
Retrospective rating (retro)
System of establishing rates in which the current year’s insurance premium is calculated to give the actual current year’s loss experience (usage of health care). Gains may be returned by rate credits or increase of benefits or cash, and deficiencies are obtained through a recovery factor in the rates or cash. Also called retrospective rate derivation .