What is a feature of a joint underwriting association?

A joint underwriting association is designed to manage the risk of insuring high-risk individuals or properties that would otherwise be uninsurable in the standard market. One of the key features of this type of association is the pooling of premiums from multiple insurance companies to create a collective fund. This collective pooling is crucial because it allows the association to cover underwriting losses that any single member insurer might experience without jeopardizing their financial stability.

By pooling resources, the joint underwriting association can spread risk across all participating companies, thus providing coverage that helps ensure that high-risk drivers or properties have access to insurance options. This collaborative approach can enhance market stability and penetration, particularly in high-risk scenarios where individual insurers might refuse coverage.

The other options do not accurately describe the function of a joint underwriting association. For instance, minimum premiums being set for all drivers may vary significantly from association to association and doesn’t capture the essence of how risk is managed collectively. Allowing insurance companies to deny high-risk drivers generally contradicts the purpose of a joint underwriting association, which is to provide coverage for those high-risk individuals. Lastly, the notion that each company functions independently without sharing risk directly opposes the fundamental principle of risk pooling that defines a joint underwriting association. Therefore, option B correctly identifies a