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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
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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.
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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.
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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 (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 .

Retrospective review

1. In external auditing, process of going over financial documents after billing an insurance carrier to determine documentation deficiencies and errors. Also called retrospective payment audit . 2. In utilization review, evaluation of medical services given to a patient to make sure the insurance claims are paid for appropriate care (i.e., medical necessity, quality of care, physicians’ practice patterns, hospitals’ average length of stay, and reasonableness of services given).

Retrosurance

There is said to be retrosurance when, after reinsurer A has retroceded all or part of his risk to reinsurer B, reinsurer B then further cedes all or part of his risk to a third reinsurer.

Return Commission

A commission paid by a reinsurer to the ceding company for proportional reinsurance business to recompense the cedant for acquisition expenses.
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A situation that may happen in the case of a policy that pays a commission based on the full yearly premium. If the policy is cancelled before the entire premium is earned, a portion of the commission must be returned.

Return for layup and cancellation for Marine Hull

No return of premium is payable once the risk has attached, unless the underwriters avoids the contract through breach of warranty and there has been no fraud on the part of the insured. However, in a time policy on hull, it is equitable that there should be a return of premium when the risk is reduced by cancellation of part of the insured period or when a vessel is laid up in a port where it is not subject to so many perils. Cancellations for reasons other than sale or transfer are provided for in returns clause, where the return allowed is only in respect of each uncommented month that the policy is cancelled. The presence of cargo on board the vessel or loading or unloading operations shall not debar returns. However, no returns will be allowed for any period while the vessel is being used for storage of cargo or for lightering purposes.