"Subsidization" in an insurance pool means:
A) the bad risks pay more for insurance than good risks
B) the premiums collected by the insurers don't adequately cover the losses experienced by the pool
C) those who experience losses have their premiums raised
D) exposures that should be charged higher insurance rates are averaged in a pool so that the good as well as bad exposures pay the same rate

Question

Quizplus · Accepted Answer

Subsidization in an insurance pool refers to the practice of averaging rates within the pool so that both high-risk (bad exposures) and low-risk (good exposures) pay the same rate, effectively making the lower risk members subsidize the higher risk members.

"Subsidization" in an Insurance Pool Means