How does a risk become FARM
This is likely very basic but I am confused of how in a take-all comers you could have a residual market risk. If it truly is take-all comers then how is it possible someone cannot find insurance in the private market? The source says something along the line of a risk is a residual market risk if they make an application to the insurer and the insurer is authorized at law to deny the risk but what would give insurers such authorization not to write a risk in a take-all comers market?
Comments
You wouldn't explicitly deny them, you'd just charge them an exorbitant price that they cannot afford to pay which would mean they have to go to FARM for coverage. This does not happen in Alberta for example as you would have to charge the minimum of grid premium and the insurer's premium which is why there is no FARM there
@Staff-T1 can I please get clarification on the statement "there is no FARM in AB" above? I thought FARM is operated in ALL provinces except BC, MB, SK and QC
Thanks!
From my understanding there is FARM in AB. The above comment could be relating to just potentially PPV policies however.
@Staff-T1 would you just be able to clarify your statement above? Thank you!
Yes, I should have clarified that there is no FARM PPV in AB as you don't need it with a grid. There is FARM for CV. Sorry I usually just think in PPV terms for Exam 6