The Residual Market Involuntary Business, also known as the residual market or the assigned risk market, is a segment of the insurance industry that provides coverage to individuals or businesses that are unable to obtain insurance through the standard market. The residual market is designed to ensure that everyone has access to insurance coverage, regardless of their risk level or financial situation.

In the insurance industry, a residual market pool is typically established within each state or region, and insurance companies are required by law to participate in the pool. The pool is funded through assessments on insurance companies, which are then used to provide coverage to those who are unable to obtain coverage through traditional insurance markets. The residual market typically provides coverage for high-risk drivers, such as those with a history of accidents or DUI convictions, as well as businesses that are deemed too risky for traditional insurance markets.

The residual market operates under the principle of shared risk, where all participating insurance companies are responsible for sharing the risk associated with providing coverage to high-risk individuals and businesses. The insurers in the residual market pool agree to provide coverage to these high-risk individuals and businesses, with each insurer taking a portion of the risk, depending on its share of the market.

Overall, the residual market serves an important role within the insurance industry, providing essential coverage to individuals and businesses who may not be able to obtain it elsewhere. Without the residual market, these individuals and businesses would be left without insurance coverage, which could have serious financial consequences in the event of an accident or other unforeseen event.