Associate Safety Professional Practice Exam

A retrospective rating of workers' compensation insurance premiums is based on how many years of loss records?

1. Last one year

2. Last two years

3. Last three years

4. Last five years

The correct answer is: Last three years

The correct answer is based on the standard practice in the insurance industry concerning retrospective rating plans. A retrospective rating plan allows employers to pay premiums based on their actual loss experience over a specified period, which provides a financial incentive to maintain a safe workplace. According to industry standards, this loss experience is typically evaluated over the last three years. By analyzing loss records from the past three years, insurers can accurately reflect an employer's risk and claims history, which helps in determining their premium adjustments. This timeframe balances the need for a relevant data set while still being manageable for employers to track and analyze. Thus, many insurance programs use this three-year period to assess losses, making it the correct choice for the question asked.