Defined terms for the annuity market and lifetime income landscape.
Risk pooling is the arrangement in which a group of individuals combines their exposure to a shared uncertainty so that the actual cost is borne by the group as a whole and is more predictable for each member than it would be for any one person alone.
Risk sharing in the ergodicity context is the mechanism, identified in Ole Peters' ergodicity economics, by which agents who would each face a non-ergodic outcome alone pool their realized outcomes so that each member's time-average experience converges on the ensemble average.
Risk-based capital is the NAIC's standard framework for measuring the capital adequacy of US insurance carriers, calculating a required capital amount that scales with the specific risks each carrier bears and comparing it to actual capital to determine whether intervention is warranted.
The risk-based capital ratio is the standard summary measure of an insurance carrier's capital adequacy, calculated as the ratio of the carrier's total adjusted capital to its authorized control level risk-based capital amount and reported as a percentage.
