• Some assigned-risk insurance carriers pay less in insurance claims.Coche accidentado image by quicolopez from Fotolia.com
  
  An assigned-risk plan is insurance coverage given to an individual who is unable to obtain voluntary market coverage. The only option is to purchase insurance through the residual market -- otherwise known as the assigned-risk coverage. This kind of insurance -- usually provided under government or private insurance programs -- offers plans to high-risk consumers and includes property and liability coverage.
  
  

Protection from Losses

• An insurance company providing coverage under the ARP is often required to charge predetermined rates for the coverage. Providing coverage to the "uninsurable" is a high-risk business capable of running an insurance company out of business -- which is why states that require mandatory automobile insurance coverage intervene by facilitating assigned-risk plans. A company servicing such a market would be at a great disadvantage without government intervention. An ARP insurance company is responsible for administering policies and claims but the state protects it from losses. Unlike a private insurance company servicing a regular market, a company participating in a quasi-government program is insulated against losses.
  
  

Joint Underwriters Bear Risks

• A joint underwriting insurance company will usually have a contract with the state to service residual market policies. The main advantage of an insurance company is while it is responsible for performing administrative functions such as collecting premiums, selling policies and settling claims, it is not directly exposed to underwriting risks. Risks are borne by the JUA facility. What that means is that a JUA insurance company is actually spending the money of all the insurers operating in the state under the program and not just its own money.
  
  

Profit Maximization

• An insurance company under joint underwriters protection is compensated for its service on a fee-per-contract basis. If you can provide the service at a low cost, it means your profit is likely to be greater. This kind of insurance gives an insurance company the incentive to pay claims quickly to save on claim processing expenses, which might include possible litigation.