Assigned Risk

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Assigned Risk

1. A driver of an automobile who is uninsurable (usually because of a poor driving record), but is required, by law, to have automobile insurance. States assign their uninsurable drivers to insurance companies, which must provide coverage (known as automobile assigned risk insurance), though the companies charge higher premiums.

2. In workers' compensation, a worker who performs labor considered so hazardous that an insurance company will not insure his place of employment. For example, a miner or an oil rig worker may be an assigned risk. As with automobiles, states assign their uninsurable workers to insurance companies, which must provide coverage, often at higher premiums.
References in periodicals archive ?
To illustrate the relationship between involuntary market design and restrictions on classification, consider the probable consequences if a state with an assigned risk plan were to prohibit territorial rating in a way that initially mandated reduced premium rates in urban areas and increased premium rates in nonurban areas.(17) Following such a change, insurers would know that rates were below expected costs in urban areas and above expected costs in nonurban areas.
First, the concentration of the urban market in the assigned risk plan would be inconsistent with the prohibition of the use of place of residence as a rating variable.