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Assigned Risk Plan
Under an Assigned Risk Insurance Plan, each insurance company initially is allowed to refuse to sell insurance to any driver, except for reasons prohibited by antidiscrimination laws. Drivers who are initially unable to buy insurance may appeal to an organization that assigns such drivers to insurance companies in proportion to company market share. Each company is required to sell insurance to its assigned drivers, for which the company receives premiums, pays claims, and provides service.
The losses and profits incurred by an insurance company from assigned drivers are not shared with other companies. As a result, the assigned risk system may give companies greater incentive to minimize costs and claims paid than other residual market systems.
