Policy Types:  Frequently Asked Questions...

An insurance policy in which the final premium is determined without adjustment for loss experience during the policy term. The premium is solely calculated on the insureds' payroll exposure and the appropriate debits and credits.

An insurance policy in which the final premium is based on the insured's actual loss experience during the policy term and the carriers as well. Dividends, by law, are not guaranteed and are not approved until declared by the Board of Directors of the insurance carrier.

The insured typically pays installments, just as they would on a guaranteed cost insurance program. Depending on the carrier and the filed dividend plan, the carrier will review the following items:

• Final Audited Premium

• Timeliness of Payments

• Policy going to Full Term

• Loss Experience of the Insured

• Loss Experience of the Carrier

Typically, the carrier will distribute dividends approximately 6 to 12 months after the expiration of the policy.

If the insureds' losses are favorable, then the insured could get a return premium (dividend).

If the losses are unfavorable, then the insured will not receive a dividend, but will also not pay any additional premium, at least not due to losses.

An insurance policy in which the final premium is based on the insured’s actual loss experience during the policy term. It is subject to a minimum and maximum premium and the final premium is determined by a formula which is outlined in the insurance contract.

The insured typically pays installments, just as they would on a guaranteed cost insurance program. In 18 months from the inception of the policy, the insurance company does the first valuation of the losses and plugs them into the Retro Premium formula.

If the losses are favorable, then the insured could get a return premium, based on the stated minimum premium and the various factors involved.

If the losses are unfavorable, then the insured could end up paying a higher premium than they would under a guaranteed cost insurance program. All retro plans have a maximum premium, which will cap the amount of premium the insured must pay.

After the first calculation at 18 months, there will be subsequent calculations every 12 months until all losses are closed out.

Retrospective Rating plans are contracts with the insurance company and are not subject to the carriers losses or other insureds losses.