Which aspect of a Retro Plan may require collateral?

In the context of Retro Plans, the aspect that may require collateral is the assumption of risk. Retro Plans typically involve a funding mechanism where an employer or organization undertakes some level of financial risk for losses that exceed specified limits. When a company assumes risk under this type of plan, it may be necessary to provide collateral to ensure that there are sufficient funds available to cover potential losses that the plan is responsible for.

Collateral serves as a form of security for the party providing the coverage and can mitigate the financial risks they are taking on when entering into a Retro Plan. If losses occur that exceed the anticipated amounts, the collateral can be drawn upon to satisfy those financial obligations. This arrangement is particularly important in retroactive plans where the ultimate costs are not fully predictable at the outset. Therefore, the assumption of risk directly links to the need for collateral in these situations.

Other aspects like loss adjustments, cash flow advantages, and plan flexibility do not inherently require collateral, as they pertain more to management and operational strategies related to the plan rather than financial security against losses.