What Does Risk Sharing Mean?

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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.

Risk Sharing

Risk Sharing

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.

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