Glossary of Retro Terms

See also: Retro Program Rules.

Expand/collapse all

  • Expand/collapse Accident Fund

    The portion of your workers' compensation premium that pays for time-loss compensation, Permanent Partial Disability (PPD) and pension benefits. Employers pay 100% of the premium for this fund.

  • Expand/collapse Adjustment

    The comparison of calculated retrospective premium to standard premium due (or prior retrospective premium) which may result in either a refund or additional premium assessment. The first of 3 mandatory adjustments occurs approximately 10 months after the end of the retro coverage period. The subsequent 2 adjustments follow in 12-month intervals.

  • Expand/collapse Case Reserve

    L&I's estimate of the lifetime cost of an open claim. Case Reserves are established when a claim is approximately 8-10 months old and are updated every 6-12 months as long as the claim remains open.

  • Expand/collapse Composite Claim Report (CCR)

    Monthly reports that track claims in a Retro Coverage Period. During the coverage period, CCRs are mailed monthly to businesses and associations in Retro. After the coverage period ends, CCRs are mailed quarterly until the final adjustment.

  • Expand/collapse Group

    Those members of an association who elect to have group retrospective premium calculated, based on the combined premium and incurred loss data of participants. Members must comply with eligibility requirements.

  • Expand/collapse Loss Development Factor (LDF)

    LDFs are actuarially determined factors that are multiplied by Accident and Medical Aid Fund charges to determine Total Incurred Losses (Developed). LDFs are unique to each Retro Coverage Period. They allow for additional claims costs (i.e., re-openings and inadequate reserves) which may occur over time, considering all the claims in a given Retro coverage period. LDFs average nearly double the Total Claim Estimate at the first adjustment and tend to be lower in subsequent adjustments. Current LDFs can be found in the lower left-hand corner of the Summary of Claim Costs Report accompanying the Composite Claim Report.

  • Expand/collapse Loss Ratio

    Incurred Losses (Developed) divided by Standard Premium.

  • Expand/collapse Medical Aid Fund

    A portion of the workers' compensation premium shared by the employer and the employee that is set aside for payment of medical costs for any covered injury.

  • Expand/collapse Merit-Rated Distribution

    If the group earns a 10% refund, the share to members may be larger or smaller, depending on their own losses

  • Expand/collapse Performance Adjustment Factor (PAF)

    An actuarially determined factor unique to each Retro coverage year. The PAF is multiplied by the total claim estimate of Retro pension claims and incorporated into the loss development factors used for non-pension Retro claims to produce total incurred losses (developed). PAFs insure that aggregate refunds for a given Retro coverage year are in proportion to how well the Retro employers outperformed the non-retro employers.

  • Expand/collapse Plan

    L&I has two Retro Plans (Premium and Loss Based). The Plan selected will determine (along with Single Loss Limit, minimum loss ratio, maximum loss ratio and Standard Premium) which tables will be used to calculate Retrospective Premium.

  • Expand/collapse Retro Coverage Period

    A 12-month period during which a participant is enrolled in Retrospective Rating. Coverage periods are January 1 to December 31; April 1 to March 31; July 1 to June 30; and October 1 to September 30. Claims with a date of injury within the coverage period and Standard Premium due for the coverage period are used to calculate Retrospective Premium.

  • Expand/collapse Retro Valuation Date

    Date on which paid Retro claim costs and future reserves on open claims are "captured" for adjustment purposes; also know as a "freeze date". Typically, this date is about two weeks prior to the adjustment.

  • Expand/collapse Retrospective Premium

    The Retrospective Premium formula is used to calculate whether a Retro participant will earn a premium refund or if additional premium will be assessed. Details of the Retrospective Premium formula and definitions of terms are explained here (180 KB PDF).

  • Expand/collapse Retrospective Rating

    An optional financial incentive plan developed to encourage employers to control their Industrial Insurance costs through effective accident prevention and claim management programs. Employers may earn a refund on a portion of their annual standard premium or be required to pay additional premium depending on their performance during their Retrospective Rating enrollment.

  • Expand/collapse Standard Premium

    That portion of total premium due during a Retro Coverage Period, only including Accident and Medical Aid Funds, not the Supplemental Pension Fund.

  • Expand/collapse Straight Pro-Rated Basis

    If the group earns a 10% refund, each member would receive 10% of their own Standard Premium back, regardless of their losses.

  • Expand/collapse Supplemental Pension Fund

    The portion of Workers' Compensation Premium that pays for cost-of-living increases for long-term time-loss claims. It isn't included in Standard Premium used for Retro purposes or subject to experience rating.

  • Expand/collapse Total Claim Estimate

    The total of paid claim costs (plus future reserves, if any).

  • Expand/collapse Total Incurred Losses-Developed or Developed Losses

    A component of the Retrospective Rating Formula. Developed Losses for Retro pension claims are determined by multiplying the Total Claim Estimate by the applicable Performance Adjustment Factor. Developed Losses for Retro non-pension claims are determined by multiplying the Accident and Medical Aid Fund charges by the applicable Loss Development Factors.

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