Some risks are too large or too unpredictable for a single insurer to absorb alone. An insurance pool is an arrangement in which multiple insurers share premiums and losses for a defined class of risks according to agreed percentages. Each member participates in the results of the pooled business.

Pools are common for nuclear risks, aviation, terrorism, and residual auto or property markets. A pool manager handles underwriting, claims, and accounting. Members may be obligated to accept a share of every risk that meets the pool’s criteria.

Pooling spreads volatility and allows coverage to be offered where individual capacity would be insufficient. Governance documents define the sharing ratios, termination rights, and dispute procedures. Regulators often oversee pools that serve residual-market functions to ensure fair access and adequate rates.

• Shared underwriting arrangement among multiple insurers
• Spreads premiums and losses by agreement
• Used for large or residual risks
• Operated under formal participation rules