Retrospective rating plans require which level of administration by the insured?

Retrospective rating plans require which level of administration by the insured?

• A. None
• B. Moderate
• C. Small
• D. High

Answer: (B)

In retrospective rating plans the insured must actively handle loss data and reporting, because the final premium depends on actual losses incurred during the policy period. This requires keeping detailed loss records, notifying the insurer of losses as they occur, and providing exposure data or other information needed for the final adjustment. Those duties are more than a completely hands-off approach, but they aren’t as extensive as a highly hands-on, self-administered program with heavy claims management. So the level of administration required by the insured is moderate.

In retrospective rating plans the insured must actively handle loss data and reporting, because the final premium depends on actual losses incurred during the policy period. This requires keeping detailed loss records, notifying the insurer of losses as they occur, and providing exposure data or other information needed for the final adjustment. Those duties are more than a completely hands-off approach, but they aren’t as extensive as a highly hands-on, self-administered program with heavy claims management. So the level of administration required by the insured is moderate.