Glossary

Retaliation claims result when an employee alleges discrimination based on protected status (e.g., race, gender, disability) and, in retaliation for making such a claim, the employee is treated adversely (e.g., the employee receives a demotion). A successful retaliation claim must prove three elements: (1) that the employee engaged in a "protected activity" (filing a discrimination claim, alleging corporate misconduct), (2) that the employee suffered an "adverse action" (termination), and (3) that there was a causal connection between the adverse action and the protected activity. Employment practices liability insurance (EPLI) policies cover retaliation claims. Retaliation claims have also been made in conjunction with workers compensation claims. That is, employees have sued their employers when, in response to filing a workers compensation claim, an employer took some form of adverse action against the worker (e.g., imposing a change in work hours, giving the employee a demotion or a reprimand).

Retaliatory law is a state law providing that another state will be treated in the same terms that the home state is treated by the foreign state in dealings with insurance. If, for example, another state requires that all nonresident agents writing insurance or risks in that state obtain a license from that state, a state with a retaliatory law will impose the same requirement on that other state's agents.

Retention in an insurance context refers to the assumption of risk of loss by means of noninsurance, self-insurance, or deductibles.

Retention ability is the amount of aggregate incurred losses that an insured can retain in any one financial reporting period without creating an adverse impact on cash flow or earnings. Compare to risk tolerance.

A retention plan is a type of dividend plan most often used only in connection with workers compensation insurance. This plan provides that the net cost to the insured is equal to a retention factor (insurance company expenses) plus actual incurred losses, subject to a maximum equal to standard premium less premium discount. Can be used for other lines of insurance.

Retired directors liability policies are insurance policies designed to cover individuals who at one time served yet are now no longer serving on a corporate board of directors. Directors are exposed to claims long after their tenure on a board has ended. In fact, the statute of limitations for such claims under the Sarbanes-Oxley Act (SOX) of 2002 is 5 years. Standard directors and officers (D&O) liability policy forms affirmatively cover retired directors, and for this reason, retired directors policies always apply as excess over the organization's policy. However, retired directors policies may still be needed because at the time a claim is made, (1) the parent company may not have a policy in force; (2) even if a policy is in force, the policy's coverage limits may be exhausted or inadequate; or (3) the current policy may exclude a claim for which coverage is not excluded under the retired directors policy. Another advantage of retired directors policies is that the retired director is the sole insured under such policies. As a result, the insurer will focus its efforts on defending the insured's interests, which sometimes conflict with those of existing board members; and the insured does not share policy limits with other persons. For example, directors who sat on the boards at Enron and WorldCom were required to use their personal assets to settle lawsuits filed against them because the corporations they served were financially unable to provide indemnification due to the companies' insolvencies and the exhaustion of their policy limits. Five former directors of Just for Feet paid a total of $41.5 million in conjunction with their service at the company. In these situations, retired directors liability policies would likely have eliminated, or at least vastly reduced, the amounts of personal director contributions that were required.

Retirement annuity is a form of deferred annuity that provides for retirement income.

A retirement income policy is a life insurance policy providing for income during retirement age based on a percentage of the face amount for monthly income. This type of policy will have a cash value in excess of the face amount in later policy years so as to provide high death benefits or adequate retirement income.

Retraction provisions are clauses contained in media professional liability policies stating that if an insured is sued (or threatened with suit) as a result of information that has been published but that is untrue or incorrect, the insured is required to publish a timely retraction of these misstatements.

Retroactive conversion refers to the conversion of term life insurance into whole life insurance at the original age rather than attained age.