In a retrospective rating plan, when is the premium determined?

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Multiple Choice

In a retrospective rating plan, when is the premium determined?

Explanation:
In retrospective rating plans, the starting point for the premium is an estimate of future losses. The base premium is set using expected losses, providing a baseline cost that reflects what losses are anticipated. After the policy period ends, the actual losses are known, and an adjustment is made to determine the final premium within any minimum–maximum bounds. So the emphasis of the plan is on using expected losses to establish the initial premium, with true-up based on actual experience later.

In retrospective rating plans, the starting point for the premium is an estimate of future losses. The base premium is set using expected losses, providing a baseline cost that reflects what losses are anticipated. After the policy period ends, the actual losses are known, and an adjustment is made to determine the final premium within any minimum–maximum bounds. So the emphasis of the plan is on using expected losses to establish the initial premium, with true-up based on actual experience later.

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