What is a feature of a Retrospective Rating Plan?

A Retrospective Rating Plan is characterized by the premium being determined based on the insured's past loss experience during the policy period. This means that the premium amount is not fixed at the beginning; instead, it adjusts as losses are experienced. The idea is that if a business has fewer and lower losses, their premium will be lower based on that experience once the final calculations are made at the end of the policy period.

In contrast, the other options don't accurately describe this type of plan. A fixed premium does not allow for this kind of adjustment based on loss experience, and the insurer does not assume all costs of claims under this plan; rather, the insured has a significant financial incentive to manage their risk to minimize losses, affecting their final premium. Lastly, claims are typically not paid upfront by the insured; instead, the insurance handles claim payments, and the retrospective calculations affect future premiums rather than requiring upfront payment for claims.