High-risk insurance is an integral part of many insurance systems. The types of insurance available in high-risk pools depends on the state or region in which people are living, but in general, most varieties of standard insurance can also be found as high risk, including healthcare, property and automobile insurance. Whatever the type of coverage involved, high-risk insurance is made available for individuals or companies who are considered such a high risk that insurance that would ordinarily be available is either not available at all or is too expensive.
For instance, high-risk insurance for healthcare is available in many states and regions, particularly in the United States. Thirty-five states in the union have operated high-risk insurance pools to provide insurance coverage to thousands of Americans who would otherwise find it impossible or too costly to get insurance from standard insurance companies. Typically, these people do not get insurance from their employers because their employers are too small to provide insurance or the people are self-insured or are part-time or contract workers.
These high-risk healthcare insurance setups are called risk pools. In the United States, they were started in 1976 in the state of Minnesota. Lawmakers in that state created the risk pool there to provide health coverage to individuals and families that had been rejected by other insurance companies because of pre-existing health conditions. The coverage provided in these high risk pools is typically more expensive than standard insurance. Under certain laws, however, such insurance coverage can be subsidized by the government, and more of these high-risk pools can be formed under the new U.S. federal healthcare reform law.
Another type of high-risk insurance is property insurance, particularly for home owners and businesses that live in areas that are frequently affected by catastrophes. For families and small companies along the Atlantic Ocean and Gulf Coasts, high-risk hurricane insurance pools may be the only way to acquire insurance for their properties. These insurance arrangements of last resort are for property owners that have been rejected by standard hurricane insurance companies. Again, the high-risk insurance can be expensive, but it is available.
For other countries around the world, high-risk insurance arrangements can also provide solutions to difficult insurance situations. In the United Kingdom, for example, a government-sponsored risk pool exists for terrorism insurance. Terrorism is considered by many insurance companies to be a risk that is too hard to underwrite largely because it is unpredictable and because the damage from it can be nearly unlimited in scope.