-R-
Real Property - Land and most things attached to the land, such as buildings and vegetation.
Red Lining - Discriminating unfairly against a risk solely because of its location. An example would be refusing to insure a risk because the building is located in a depressed area or location. Sometimes these areas are referred to as blackout areas.
Rehabilitation Benefits - Physical and/or vocational rehabilitation benefits provided to an injured person following a work-related injury, and intended to restore the person to a point where gainful employment is possible.
Reimbursement - Payment of an amount of money upon the occurrence of a loss covered by the policy.
Reinstatement - (1) Restoration of a lapsed policy. (2) Restoration of the original amount of a type of policy that reduces the principal amount by the amount of claims.
Reinsurance - A type of insurance that involves acceptance by an insurer, called the reinsurer, of all or a part of the risk of loss covered by another insurer, called the ceding company. It is a way for an insurer to avoid having to pay for large or catastrophic losses.
Reinsurer- The insurer that accepts all or a portion of the liabilities of the ceding company
Release - (1) To give up, abandon, and discharge a claim or an enforceable right of one person against another. (2) The name of the instrument evidencing such an act. For example, if a claim representative obtains a release from a claimant, this means that the claimant has given up all further rights against the insurance company.
Removal - One of the three perils covered under the Standard Fire policy. It covers damage caused by the removal of property from the premises because of a fire.
Renewal - The reestablishment of the in-force status of a policy, the term of which has expired or will expire unless it is renewed.
Rent-a-captive- 1) Captive which uses the capital of third-party investors in lieu of capitol from the insured. 2) Licenses offshore insurers owned by an outside organization (e.g., a broker, reinsurer, insurance company, or other business enterprise). These facilities are available to other organizations for a fee.
Replacement - A new policy written to take the place of one currently in force.
Replacement Cost - The cost of replacing property without a reduction for depreciation. By this method of determining value, damages for a claim would be the amount needed to replace the property using new materials.
Rescission - (1) Repudiation of a contract. A party whose consent to a contract was induced by fraud, misrepresentation or duress may repudiate it. A contract may also be repudiated for failure to perform a duty. (2) The termination of an insurance contract by the insurer when material misrepresentation has occurred.
Reserve - (1) An amount representing actual or potential liabilities kept by an insurer to cover debts to policyholders. (2) An amount allocated for a special purpose. Note that a reserve is usually a liability and not an extra fund.
Residual Market Load (RML)- A separate charge for subsidy of the assigned risk market.
Retirement Plans There are several retirement plans. They vary in how much money can be contributed, whether employees other than the owner may participate, what (if any) contributions the employer must make on behalf of employees, what deadlines there are for putting money into the plan, and how hard it is to operate the plan. Among the options are SIMPLE IRAs, SEP IRAs, profit-sharing plans, SIMPLE 401(k) plans, and single-participant 401(k) plans.
SIMPLE IRA or Savings Incentive Match Plan for Employees. This plan is ideal for employers with fewer than 100 employees. Here, the owner and any employees can save up to $10,500 a year, indexed for inflation, of their own money. If an employee is over 50, an additional "catch-up" amount of $2,500 is allowed. The employer must generally either contribute an additional 2% of each employee's compensation to the plan or match 100% of each employee's contribution up to 3%.
- SEP IRAs. The Simplified Employee Pension IRA is significantly different from SIMPLE IRAs. The key difference is that the employer funds the SEP IRAs entirely. The employer is allowed to contribute an amount not to exceed the lesser of 25% of the employee's compensation, or $45,000 (indexed for inflation each year).
- Profit-Sharing Plans. These plans are generally all employer-funded. Employer contributions are flexible and limited to an amount not to exceed the lesser of 25% of the employee's compensation, or $45,000 (indexed for inflation each year).
- SIMPLE 401(k). These plans share many similarities with SIMPLE IRAs. The same 100-employee limit applies, as does the $10,500 limit on employee contributions. The employer must match up to 3% of the employee's contribution, or make a non-elective contribution of 2% of compensation for each eligible employee.
- Single-Participant 401(k). These plans enable business owners without employees (other than a spouse) to take advantage of the higher limits that 401(k) plans allow. By using a single-participant 401(k) plan, a business owner can choose to save $15,500, plus an additional $5,000 for owners over 50 years of age. In addition, the business can make a tax-deductible employer contribution on the owner's behalf of up to 25% of compensation. The total contributions cannot exceed $45,000, indexed for inflation each year.
Retroactive Date - Date on a "claims made" liability policy which triggers the beginning period of insurance coverage. A retroactive date is not required. If one is shown on the policy, any claim made during the policy period will not be covered if the loss occurred before the retroactive date.
Retention- 1) Budgeted losses + tolerance corridor. 2) Assumption of risk of loss as through the use of non-insurance, self-insurance, or deductibles. This retention can be intentional (active retention) or, when exposures are not identified, unintentional (passive retention). 3) In reinsurance, the net amount of risk the ceding company or the reinsurer keeps for its own account or that of specified others' it may be expressed as a percentage, a specific dollar amount, or a combination of both.
Retention Level- The amount of loss that is self-insured. It is usually expressed on a per occurrence basis. It is sometimes referred to as the self-insured retention (SIR).
Retrospective Rating- A rating plan that adjusts the premium, subject to certain minimum and usually a maximum, to reflect the current loss experience of the inured. Retrospective rating combines actual losses with graded expenses to produce a premium which more accurately reflects the current experience of the insured. An adjustment is performed periodically following policy expiration to recognize the fluctuation in losses. A plan of this type can be used in carious types of insurance, especially Workers Compensation and Liability and is usually elected by only very large accounts. The retro agreement is generally and agreement that is separate form the insurance contract but is coordinated with the insurance contract.
Risk- Common definitions
- Chance of loss
- Uncertainty concerning loss.
- A possibility of a variation of outcomes from a given set of circumstances.
Risk Bearing- Particular department of an organization or company bears 100% of the costs associated with the losses
Risk Control- The technique of minimizing the frequency or severity of losses with training, safety, and security measures.
Risk Financing- Most cost effective risk management techniques to assure post-loss financial resource availability. Risk financing programs can involve insurance rating plans, self-insurance programs, or captive insurers.
Risk Management- There are various definitions of risk management, but the basic theme is to protect the company's assets through identification and analysis of exposures, controlling the exposures, financing of losses with external and internal funds, and implementation and monitoring of the risk management process. Further, risk management should be practical and professional; be interdisciplinary and enterprise-wide; consider strategic, operational, and financial risks; utilize the five steps of the risk management process of identification, analysis, control, financing, and administration; and optimize risk to help an enterprise achieve its goals.
Risk Management Process- A system for treating pure risk: identification and analysis of exposures, selection of appropriate risk management techniques to handle exposures, implementation of chosen techniques, and monitoring the results.
Risk Profiling- Measurement of expected losses for a finite period of time based on historical data including but not limited to, total losses, number of losses, average loss size and timing of payment
Risk Purchasing Group- A group formed in compliance with the Risk Retention Act for the purpose of negotiating for and purchasing insurance from a commercial insurer.
Risk Quantification- Actual forecasting of loss frequency and severity to determine allocation decisions
Risk Retention- conscious acceptance of losses that the organization or company will bear
Risk Retention Group- A group self-insurance plan or group captive insurer operating under the Risk Retention Act of 1986. A risk retention group can cover the liability exposures, other than workers compensation exposures, of its owners.
Risk Sharing- Particular department of an organization or company shares the cost to pay another department's losses
Robbery - The felonious taking, either by force or fear of force, of the personal property of another.
Running Down Clause - This is an additional coverage which can be added to an Ocean Marine Hull policy to provide protection to the insured against liability for damage to another ship caused by collision.
Runoff - A termination provision in a reinsurance contract stipulating that the reinsurer shall remain liable for loss under each reinsured policy in force until its expiration date.