In which plan all activities writing automobile insurance in a state are allocated a share of the involuntary business on an equitable basis?
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A. B. C. D.B
The plan in question is known as the "Automobile Insurance Plan" (AIP). AIPs are also commonly referred to as "Assigned Risk Plans" or "Residual Market Plans".
AIPs are typically created by state insurance regulators to ensure that automobile insurance is available to all drivers, regardless of their driving history or risk profile. Under normal circumstances, insurance companies have the ability to choose which drivers they will cover, and at what price. However, some drivers may be deemed too risky to insure through the normal market. In such cases, AIPs step in and assign these drivers to insurance companies on a fair and equitable basis.
In other words, AIPs allocate the high-risk drivers (i.e., the involuntary business) to insurance companies in a way that is fair and proportional to each company's overall book of business. This helps to ensure that no single company is overburdened with too many high-risk drivers, which could lead to financial instability or insolvency.
Therefore, the correct answer to the question is B. "Automobile Insurance".