The amount of liability assumed by the insurance company and not re-insured. Insurance companies typically earmark and hold a portion of insurance premiums as a hedge against planned or unexpected expenses. Some examples for uses of “retention” are: claim payment services, contract and booklet preparation, actuarial services, charge for broker commissions and consultant fees, risk charge, profit for the carrier, and reserve against unusual large claim occurrences.
The dollar amount that an Insured assumes as its own liability and which is not insured ("self-insured retention"). A retention functions similar to a deductible as in the retention is the amount of the loss that the Insured is responsible to pay.
Process by which a portion of a property or liability loss is absorbed by the business, typically in the form of a deductible, rather than being transferred to others, such as an insurance company.