2017 Fall #6
Could someone please explain why the JUA would have lower volatility than the RF if in both cases the insurer shares in profits/losses/expenses in proportion to their voluntary business market share.
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Could someone please explain why the JUA would have lower volatility than the RF if in both cases the insurer shares in profits/losses/expenses in proportion to their voluntary business market share.
Comments
The comparison is made between JUA and Assigned Risk Plan, not RF.
With JUA/RF, the resulting profit/loss of the total pool is shared. With ARP, subgroups of residual risk are assigned to different carriers. The results of the subgroups will be varied.