What is a shared market in insurance?

A shared market in insurance is characterized by its focus on providing coverage for high-risk individuals who typically have fewer options available to them in standard markets. This market structure allows insurers to pool risks and spread them among a group of providers. The idea is to enable those who might be considered uninsurable in traditional contexts to obtain necessary insurance, albeit often at higher premiums. In these environments, different insurers participate by sharing the risks associated with insuring high-risk individuals or properties.

This model contrasts with other types of markets that either exclude such high-risk individuals or operate under entirely different frameworks. For instance, a cooperative insurance model involves members pooling their resources to insure one another, but doesn’t necessarily focus on high-risk individuals. Similarly, excluding high-risk drivers or offering coverage solely online differs from the essence of a shared market, which aims to provide support and coverage options to those who might struggle to find them elsewhere.