residual market

A residual market is an insurance market systems for various lines of coverage (most often workers compensation, personal automobile liability, and property insurance). It serves as a coverage source of last resort for firms and individuals who have been rejected by voluntary market insurers.

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Residual markets require insurers writing specific coverage lines in a given state to assume the profits or losses accruing from insuring that state's residual risks in proportion to their share of the total voluntary market premiums written in that state.