Glossary

A retroactive date is a provision found in many (although not all) claims-made insurance policies that eliminates coverage for claims produced by wrongful acts that took place prior to a specified date, even if the claim is first made during the policy period. For example, a January 1, 2030, retroactive date in a policy written with a January 1, 2030-2031, term, would bar coverage for claims resulting from wrongful acts that took place prior to January 1, 2030, even if claims (resulting from such acts) are made against the insured during the January 1, 2030-2031, policy period. There are two purposes of retroactive dates: (1) to eliminate coverage for situations or incidents known to insureds that have the potential to give rise to claims in the future and (2) to preclude coverage for "stale" claims that arise from events far in the past, even if such events are unknown to the insured. In the former case, the retroactive date preserves the principle of "fortuity"—that is, the insurer should not be called on to cover the so-called burning building. In the latter instance, the retroactive date makes policies more affordable by precluding coverage for events that, while insurable, are remote in time.

Retroactive insurance refers to insurance purchased to cover a loss after it has occurred. For example, such insurance may cover incurred but not reported (IBNR) claims for companies that were once self-insured.

Retrocedent refers to the ceding reinsurer in a retrocession.

A retrocession is a transaction in which a reinsurer transfers risks it has reinsured to another reinsurer.

A retrocessionaire is a reinsurer of a reinsurer.

Retrocessional pools refer to treaty reinsurance where the cedent or retrocedents are also retrocessionaires of the same treaty, with the objective of achieving improved risk distribution. The premiums and losses in the pool are retroceded based on the fraction of the total reinsurance written by each cedent. Usually a surplus share agreement.

Retrospective aggregates refer to the transfer of a portfolio of retroactive insurance risk or self-insured balances—insuring the incurred but not reported (IBNR) and incurred but not enough (IBNE)—all risks ceded for an agreed price.

Retrospective rating is a rating plan that adjusts the premium, subject to a certain minimum and maximum, to reflect the current loss experience of the insured. It combines actual losses with graded expenses to produce a premium that more accurately reflects the current experience of the insured. Adjustments are performed periodically, after the policy has expired.

A return-to-work program is a post-injury program that returns injured employees to some type of work as soon as medically possible. Even if the injured workers are impaired, temporary or modified duties can be assigned that take the impairments into consideration. The end result is the reduction of indemnity costs associated with the claims.

Return of premium refers to a form of life insurance that provides for the return of premium as well as payment of the face amount upon death of the insured. This is usually accomplished with increasing term insurance.