Regulatory pricing risk

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Regulatory pricing risk

Risk that arises when insurance companies are subject to regulation of the premium rates that can they charge.

Regulatory Pricing Risk

In insurance, the risk that regulators will directly set or exert influence on the premiums that insurance companies may charge. If premiums are required to be too low on a certain class of policyholders, this means the insurance company has to raise them on other policyholders, which may cost the company's clients. On the other hand, if all premiums are regulated, the insurance companies may have to sacrifice profitability.