[[Actuarial Notes Wiki|Wiki]] / [[Exam 5 (CAS)]] / **Retrospective Rating** ## Definition ==Retrospective Rating== is a premium adjustment mechanism where the final premium is determined after the policy period based on actual losses incurred, subject to minimum and maximum limits. ## Formula ``` Retro Premium = (Losses × Loss Conversion Factor + Fixed Costs) × Tax Multiplier Subject to: Minimum Premium (usually 25-75% of standard) Maximum Premium (usually 125-200% of standard) ``` ## Uses - Large commercial risks - Workers compensation - Self-insured retentions - Risk-sharing arrangements ## Related Concepts - [[Experience Rating#Definition]] ## References - Werner & Modlin, Chapter 12