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Rate. The price per unit of insurance.

Rate on Line. A term, typically used in the London markets, referring to the ratio between premiums and coverage limits.

Rated Policy. An insurance policy issued at a higher premium rate to cover risks considered to be particularly severe.

Rating Agencies. Providers of credit opinions and analysis of financial institutions, including insurers. For a listing of rating agencies that cover the insurance industry, see Chapter 13.

Reasonable and Customary Charges. Fees and expenses relating to health care services that are comparable to rates and charges for similar services within a given territory.

Reassured. A synonym for reinsured.

Rebating. The practice, illegal in most jurisdictions, by which an insurer or agent returns a portion of the premium or provides other consideration to induce the purchase of insurance.

Receiver. An insurance regulator acting in the capacity of a rehabilitator or liquidator of an insurer.

Reciprocal Insurer. An unincorporated business, usually managed by an attorney-in-fact, that underwrites insurance for its subscribers.

Redlining. The practice of discriminating against certain classes of consumers, particularly purchasers of insurance in urban areas.

Rehabilitate. To restore an insurer to financial stability and solvency.

Rehabilitator. A public official, usually an insurance commissioner or an appointed deputy, with responsibility for rehabilitating an insurer.

Reinstatement. The process of restoring a lapsed policy by the payment of an overdue premium.

Reinsurance. An arrangement in which an insurer passes risk and obligations to another insurer.

Reinsurance Association of America (RAA). A Washington, DC-based trade organization representing professional reinsurers and other reinsurers.

Reinsurance Recoveries. Outstanding amounts due and payable by a reinsurer to a cedant.

Reinsured. The term for an insurer that has transferred all or part of its underwritten risk to a third party by purchasing reinsurance; also known as a Cedant.

Reinsurer. An insurer that assumes reinsurance risk.

Renewable Term Insurance. Term life insurance that, by its terms, is renewable for a limited number of additional terms by the policyholder without evidence of insurability. See Term Life Insurance.

Rent-A-Captive. An insurer formed for the purpose of insuring risks associated with the activities of a group of insureds; it is controlled not by the insured but by an insurer, a broker or other third party.

Renters Policy. See Tenants' Policy.

Replacement Cost Insurance. A form of property insurance in which the insured is indemnified for property losses based upon replacement cost, without regard to depreciation.

Reserve Deficiency. The shortfall between the currently estimated cost of claim payments and related expenses that an insurer ultimately will be required to pay and the reserves currently established by the insurer.

Reserve Discounting. See Discounting of Reserves.

Reserve Redundancy. The amount by which the reserves currently established by an insurer exceed the currently estimated cost of claim payments and related expenses that the insurer ultimately will be required to pay.

Reserves. Liability established by an insurer to reflect the estimated cost of claim payments and related expenses that the insurer ultimately will be required to pay with respect to the insurance it has underwritten.

Residual Market. An assigned risk plan, joint underwriting association or any similar mechanism designed to make coverages available to those unable to obtain them in the voluntary markets.

Residual Value Insurance. A form of insurance that guarantees the owner of leased property a specified value as of a particular date, usually the termination of the lease.

Res Ipsa Loquitor. A Latin phrase meaning "the thing speaks for itself." As a legal doctrine, because the event speaks for itself, the burden of proof falls to the defendant to overcome a presumption of negligence.

Respondeat Superior. The legal doctrine that employers may be held liable for the acts of their employees acting within the scope of their employment.

Retention. The amount or portion of risk that an insurer or a self-insured retains for its own account. Also known as "net line."

Retrocession. A transaction in which a reinsurer cedes to another reinsurer (the "retrocessionaire") all or a part of the reinsurance it has assumed. A retrocession does not legally discharge the ceding reinsurer from its liability to the reinsured.

Retrocessionaire. The reinsurer of a reinsurer.

Retrospective Rating. See Experience Rating.

Retrospective Review. After-treatment monitoring of utilization patterns against objective medical norms to detect inappropriate care (too little or too much) or excess cost. This is a component of utilization management.

Return on Surplus (ROS). Operating income divided by mean surplus.

Return Premium. Premium that has been paid to an insurer but which has not been earned and is returned to the insured when the policy is canceled or the terms of the policy are changed, thus reducing the amount of premium due.

Revocable Beneficiary. The beneficiary under a life insurance policy whose designation as beneficiary can be changed at the discretion of the policy owner.

Rider. See Endorsement.

Risk. The chance or possibility of loss. For example, physicians may be held at risk if hospitalization rates exceed agreed-upon thresholds. The sharing of risk often is employed as a utilization control mechanism within the HMO setting. Risk also is defined in insurance terms as the possibility of loss associated with a given population.

Risk and Insurance Management Society (RIMS). A New York City-based trade organization of risk managers and purchasers of commercial lines insurance.

Risk-Based Capital. A formula method for estimating the capital requirements of an insurer by measuring its risk characteristics in areas such as asset risk, credit risk and underwriting risk and then comparing the results to the company's stated capital. See Chapter 12.

Risk HMO. A type of Medicare private managed care plan, provided for under TEFRA, which is essentially a closed-network HMO that provides Medicare-covered services and (usually) supplemental benefits in exchange for fixed payments from Medicare, including what are referred to as Competitive Medical Plans (CMPs).

Risk Management. The practice of evaluating and managing the risks to which a particular business or organization may be exposed.

Risk Manager. A person with responsibility for the evaluation and management of risks. Among the functions usually performed by a risk manager is the purchase of insurance.

Risk Retention Act. See Liability Risk Retention Act of 1986.

Risk Purchasing Group (RPG). A large group of individuals, companies or trade associations combining to request insurance rates based on their perceived loss experience. Requests for reduced rates may be justified by some special characteristic of the group (e.g., specialized training), which will result in fewer and/or less severe claims.

Risk Retention Group (RRG). A group of companies or trade associations combining to operate as a limited-purpose insurer as permitted under the Liability Risk Retention Act of 1986. RRGs combine resources as well as pool risk.

Risk Transfer. The process of transferring responsibility for losses from one party to another, such as from an insured to an insurer.

Rollover Individual Retirement Account. An IRA established to receive distribution of assets from a qualified pension or retirement plan, thus providing a way to maintain the tax-deferred status of distributions until an age specified by law.

ROS. See Return on Surplus.

RPG. See Risk Purchasing Group.

RRG. See Risk Retention Group.

Rule of 78s. A method, used primarily in credit insurance, for earning premiums which is faster than level amortization; also known as the sum-of-the-years'-digits method.

Run-off. The process of managing a discontinued line of business.