What does Risk Sharing mean? Read on to discover the definition & meaning of the term Risk Sharing - to help you better understand the language used in insurance policies.
Also known as "risk distribution," risk sharing means that the premiums and losses of each member of a group of policyholders are allocated within the group based on a predetermined formula. Risk is considered to be shared if there is no policyholder-specific correlation between premiums paid into a captive, for example, and losses paid from the captive's reserve pool.
We hope the you have a better understanding of the meaning of Risk Sharing.