Definition - What does Insurance Pool mean?
An insurance pool is a gathering of insurance companies for a specific business endeavor, usually when a financial risk is too high for a single company to take on and can only be addressed through shared resources.
Insuranceopedia explains Insurance Pool
When a financial risk is too high or even catastrophic for one company's financial status, companies can band together to form an insurance pool. These companies combine their resources as a form of risk management.
Companies might, for example, form an insurance pool to provide earthquake insurance in an earthquake-prone area. Or they may band together to provide insurance to people with serious medical problems.
Businesses can also create their own insurance pools rather than having insurance companies provide them with their insurance needs. They form, in essence, an insurance community and create their own insurance programs that might be more sustainable and affordable than the ones offered by insurance companies.
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