Which plan is considered part of the residual market facilities?

Which plan is considered part of the residual market facilities?

• A. Catastrophe Property Insurance Pool
• B. TWIA
• C. Assigned Risk
• D. FAIR Plan Association

Answer: (C)

Residual market facilities exist to provide insurance when the voluntary market won’t cover a risk. The Assigned Risk plan is the classic residual-market mechanism for auto insurance. It ensures that drivers who can’t obtain coverage through standard insurers can still be insured by having insurers take on these high‑risk policies, with rates and administration governed by state rules. This illustrates the core idea of the residual market: distribute hard-to-place risks across insurers so people can obtain needed coverage. The other programs are related residual-market style efforts for different lines—such as property—like the plan that handles homeowners and commercial property, and a windstorm association that provides coastal wind coverage. There’s also a catastrophe property pool for certain catastrophe exposures. Those illustrate the broader family of residual-market facilities, but the auto Assigned Risk plan is the foundational example most often identified as the residual market in policy and exam contexts.

Residual market facilities exist to provide insurance when the voluntary market won’t cover a risk. The Assigned Risk plan is the classic residual-market mechanism for auto insurance. It ensures that drivers who can’t obtain coverage through standard insurers can still be insured by having insurers take on these high‑risk policies, with rates and administration governed by state rules. This illustrates the core idea of the residual market: distribute hard-to-place risks across insurers so people can obtain needed coverage.

The other programs are related residual-market style efforts for different lines—such as property—like the plan that handles homeowners and commercial property, and a windstorm association that provides coastal wind coverage. There’s also a catastrophe property pool for certain catastrophe exposures. Those illustrate the broader family of residual-market facilities, but the auto Assigned Risk plan is the foundational example most often identified as the residual market in policy and exam contexts.