ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A health insurance risk pool is a group of individuals whose medical costs are combined to calculate premiums. Pooling risks. together allows the higher costs of the less healthy to be offset by the relatively lower costs of the healthy, either in a plan overall or within a premium rating category.

Detailed explanation-2: -Assigned risk is a method of providing certain types of insurance to those who otherwise would be denied coverage because they would be considered too high-risk.

Detailed explanation-3: -Automobile insurance is a prime example of how assigned risk pools work. Many states require automobile insurance. Some people, due to their driving record, the car they drive, where they live, or some other circumstance, cannot get insurance because no one will insure them.

Detailed explanation-4: -For instance, car insurance companies may deem you high-risk if you have driving violations on your record, have been convicted of a DUI, are under the age of 25 or over 70, or have bad credit (depending on your state). And being classified into a higher risk pool means you’ll pay more for car insurance.