2001 # 24 - Involuntary Market Burden

[Pachoo]

On 2001 Question #24, they ask to compute the involuntary market burden. The question states that 5% of the voluntary market, or $2.5 million is moving to self-insurance.

All 10 doesn't include this $2.5 million as part of the involuntary market burden. Doesn't the $2.5 million get considered as part of the involuntary market share? It certainly isn't voluntary.

Their solution as Voluntry = $48.5 million, which seems right
Their Involuntary though = $9 miliion, when I think it should be $11.5 million.

Anyone know what I am missing here, or is the solution in their guide wrong?

Thanks. :)

[Colymbosathon ecplecticos]

The voluntary market are those risks that the industry voluntarily writes.

The involuntary market are those risks that the industry writes against its will.

When a risk self-insures it leaves the insurance arena altogether. It would be good public policy to make these risks contribute to the industry's involuntary market burden, but not all states do this.

[Examinator]

http://www.actuarialoutpost.com/actuarial_discussion_forum/showthread.php?t=48435