What is a pool?
When the marketplace doesn't have insurance options to meet a group’s specific needs (no willing insurer, sky-high premiums, meager coverage, terrible service, etc.), the group can come together to form a risk-sharing arrangement to finance and pay claims in a shared risk pool. The pool contains and stabilizes long-term costs, reduces risks and increases member safety. In short, the pool provides holistic risk management, not just insurance as a commodity.
Benefits of pooling
Financial stability
- You pay predictable, sustainable contributions for coverage year over year, not the dramatic price swings more common in the profit-driven commercial insurance market.
- If offers the potential to accumulate surplus for members, not private shareholders. Surplus can protect against catastrophic losses, help keep rates low and fund special risk reduction programs.
- It permits investing resources to produce additional income. (Investment regulations and practices vary widely by lines of coverage and state rules.)
Tailored coverage
- It offers access to coverages, term limits and services needed for critical business functions, and often includes less typical risks not covered favorably by traditional carriers.
- Innovations for evolving risks help members manage operations.
- Claims handling and service are specialized when coverage is triggered.
Risk management collaboration
- A pool is member created, member owned and member focused. In short, members have a powerful voice in determining what the program does.
- It helps create, foster and manage safe environments among members to minimize personal, physical and property damages and losses.
- It invests in loss prevention and member education rather than just paying claims.