High-risk pools are established by insurers to provide coverage for individuals who would normally be denied insurance due to their high risk. These groups exist in various categories of insurance, including auto, life, and health insurance. While proponents argue that these groups lower premiums for “normal risk” policyholders, opponents claim that they increase premiums for high-risk individuals and create a group more likely to need care.
In the United States, high-risk pools are groups of insureds that are actuarially determined by risk greater than all insureds by insured risk. High-risk groups of auto insurance policyholders, for example, consist of drivers with poor driving records, indicating that they are at higher risk of being in a car accident than policyholders with good driving records. High-risk individuals would, in many cases, normally be denied the right to purchase the insurance involved; These groups are established to give them the opportunity to carry the insurance despite the risk. The insurer identifies these policyholders and “groups” them for actuarial purposes.
There are high risk groups in many different categories of insurance. In most cases, policyholders pay a higher premium to have the insurance; Part of the reason for the establishment of these groups is to protect the other policyholders, those of “normal” risk, from the higher risks. Those who work in law enforcement and firefighting, for example, are recognized as high-risk occupants, and when they buy life insurance, they are typically placed in a high-risk group established for those in hazardous occupations. . Similar situations exist for people with dangerous hobbies like skydiving, scuba diving, and motorcycle racing.
High risk pools for auto insurance, called “assigned risk” pools in some states, are found in most states so drivers with poor records can get insurance. Some states require all insurers operating in the state to accept some drivers from the high risk pool, with high risk premiums, to spread the risk. Newly licensed drivers with no driving record are often placed in assigned risk groups for the first year or two of their driving careers, after which they can purchase appropriate coverage with their driving records.
High-risk groups of health insurance policyholders have long been a feature of the US health insurance market, but they drew new attention with the US health care reform debate that culminated in in 2010. Health reform legislation enacted that year prohibited health insurance companies, beginning in 2014, from denying coverage to potential adult insureds based on pre-existing conditions. Between the bill’s enactment and then, those denied coverage for that reason were allowed to join federally subsidized high-risk pools established in each state.
High-risk groups in health insurance are controversial. Its proponents claim that by segregating high-risk people, premiums are lowered for the remaining “normal risk” policyholders. Opponents point out that the goal of insurance is to spread risk, not aggregate it, and that segregating some policyholders into high-risk groups dramatically increases their premiums while creating a group that is much more likely to need care.
Smart Asset.
Protect your devices with Threat Protection by NordVPN
