The risk that arises when regulators (insurance regulators) restrict the premium rates that insurance firms are allowed to charge. In other words, an insurance company may be exposed to such a risk being reflected in its inability to increase premium rates quoted and applied to insurance policies issued.
In turn, this impacts its bottom line and profitability.
It is a pricing risk in the sense that it impacts an insurer’s ability to price its policy in response to certain requirements.
Comments