General

RIMS.
See Risk and Insurance Management Society, Inc.

Rate.
The cost of a given unit of insurance. For example, in Ordinary Life Insurance, it is the price of $1,000 of the face amount. In Disability Income Insurance, it is usually the price per $10 or per $100 of monthly benefits. In Property Insurance, it is the rate per $100 of value to be insured. The premium, then, is the rate multiplied by the number of units of insurance purchased.

Rate Card.
A pocket size card issued by an insurer giving rates for various coverages. It is carried by an agent or sales representative for quotation purposes.

Rate Discrimination.
The use of different rates for insureds or risks of the same class and characteristics. Rate discrimination is prohibited by all state insurance laws.

Rate Manual.
A manual containing rates for various coverages, information and instructions for field underwriting, insurer's rules for the guidance of agents, and, in the case of Life Insurance rate manuals, cash amount forfeiture values and dividend scales (if any).

Rate of Natural Increase (Or Decrease).
The birth rate minus the death rate. If there were no migration, this would equal the rate of population increase (or decrease).

Rating Bureau.
A private organization that classifies and promulgates manual rates and in some cases compiles data and measures the hazards of individual risks in terms of rates in geographic areas, the latter being true especially in connection with Property Insurance.

Rating Class.
The rate class into which a risk has been placed. See also Class.

Rating, Experience.
See Experience Rating.

Rating, Merit.
See Merit Rating.

Rebate.
A portion of the agent's commission returned to an insured or anything else of value given an insured as an inducement to buy. The payment of policy dividends, retroactive rate adjustments, and reduced premiums that reflect the savings of direct payment to an agent or home office are not usually considered to be rebates. In most cases rebates are illegal, both for the agent or insurer to give a rebate and for an insured to receive one.

Reciprocal Insurance Exchange.
An unincorporated group of individuals, called subscribers, who mutually insure one another, each separately assuming his share of each risk. Its chief administrator is an attorney in fact.

Renewal.
The reestablishment of the in-force status of a policy, the term of which has expired or will expire unless it is renewed.

Renewal Certificate.
A short form certificate which is used to renew a policy. It refers to the original policy, keeping all of its provisions, but does not restate all of its insuring agreements, exclusions, and conditions.

Renewal Commission.
A commission paid on premiums subsequent to the first-year commission.

Renewals.
(1) The premiums paid for renewed policies. (2) The commissions paid on renewal premiums.

Replacement.
A new policy written to take the place of one currently in force.

Representative.
An agent or sales representative.

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. On occasion a reserve may be an asset, such as a reserve for taxes not yet due.

Reserve, Unearned Premium.
See Unearned Premium Reserve.

Resident Agent.
An agent domiciled in the state in which he writes insurance.

Residual Markets.
Various insurance markets outside of the normal agency-company marketing system. Residual markets include government insurance programs, specialty pools (aviation risks and nuclear risks), and shared market mechanisms (assigned risk plans).

Retail Credit Company.
The former name of Equifax, a credit reporting organization. See Equifax.

Retention of Risk.
Assuming all or part of a risk instead of purchasing insurance or otherwise transferring the risk. One of the four major risk management techniques. See Risk Management.

Retrospective Premium.
The final premium in a retrospective rating plan. See Retrospective Rating.

Retrospective Rating.
A plan for which the final premium is not determined until the end of the coverage period and is based on the insured's own loss experience for that same period. It is subject to a maximum and minimum. A plan of this type can be used in various types of insurance, especially Workers Compensation and Liability, and is usually elected by only very large insureds. See also Basic Premium.

Return Commission.
A commission which is paid back by the agent if a policy is cancelled before its normal expiration date. This situation arises because the commission was based on the full annual premium, and if the policy is cancelled before it is earned, a pro rata portion of the commission must be returned.

Return Premium.
A portion of the premium returned to a policy owner as a result of cancellation, rate adjustment, or a calculation that an advance premium was in excess of the actual premium. See also Pro Rate and Short Rate.

Revival.
See Reinstatement.

Rider.
An attachment to a policy that modifies its conditions by expanding or restricting benefits or excluding certain conditions from coverage. See Waiver and Endorsement.

Risk.
(1) Uncertainty as to the outcome of an event when two or more possibilities exist. See also Pure Risk and Speculative Risk. (2) A person or thing insured. Contrast with Hazard and Peril.

Risk and Insurance Management Society, Inc.
(RIMS) An association of risk managers and insurance buyers, organized for educational purposes to promote the risk management concept. RIMS attempts to foster closer relationships among buyers, to make the insurance needs of businesses known, and to promote better relations among all interested parties within the insurance industry.

Risk, Degree of.
See Degree of Risk

Risk Management.
Management of the pure risks to which a company might be subject. It involves analyzing all exposures to the possibility of loss and determining how to handle these exposures through such practices as avoiding the risk, reducing the risk, retaining the risk, or transferring the risk, usually by insurance.

Risk Retention Groups.
Liability insurance companies owned by their policyholders. Membership is limited to people in the same business or activity which exposes them to similar liability risks. The purpose is to assume and spread liability exposure to group members and to provide an alternative risk financing mechanism for liability.