Assigned Risk Programs
Regulators sets uniform rates (which are not actuarially sound). The rates are subsidized by safer drivers/other policyholders of the insurer ?
Is this correct ? and if so, why don't the other (i.e. safer drivers/policyholders) object ? why should the safer drivers have to pay for bad risks ?
Comments
The actuarial soundness of ARP rates are circumstantial, but they are not subsidized. They reflect the higher level of risk. "Uniform" means they don't vary from insurer to insurer.