Janet was unable to obtain auto insurance in the voluntary insurance market.She was contacted by the state insurance department and notified that XYZ Insurance would be her insurer.Eric was also unable to obtain auto insurance,and he received a similar notice.ABC Insurance would be his insurer.The mechanism used in Janet's and Eric's state to provide auto insurance to high-risk drivers is a(n)

Question

Quizplus · Accepted Answer

The mechanism in Janet's and Eric's state to provide auto insurance to high-risk drivers is an automobile insurance plan. This plan, also known as a residual market mechanism, assigns high-risk drivers to insurance companies in proportion to their market share. This ensures that high-risk drivers have access to required auto insurance coverage when they are unable to obtain it in the voluntary market.

Janet Was Unable to Obtain Auto Insurance in the Voluntary