The mechanism by which the premiums of a community of policyholders finance the losses of a few, the foundation of insurance technique.
Mutualisation is the founding principle of insurance, by which a large number of policyholders pay premiums that serve to indemnify the minority among them who will suffer a loss. It rests on the law of large numbers, which makes the loss experience of a large portfolio statistically predictable, and on the relative independence of risks, so that they do not all materialise at once. Mutualisation reaches its limit when risks become strongly correlated, because a single event striking many insureds simultaneously, like a war, a pandemic or a systemic cyber-attack, destroys the independence assumption on which it rests. It is precisely this absence of boundary and this correlation that make fundamental risks hard to mutualise and call for other mechanisms, reinsurance, transfer to capital markets or public support.
The premiums of millions of motorists finance the losses of the fraction who will have an accident; but no mutualisation can absorb a loss that would strike all the insureds at once.
mutualisation du risque, pooling, risk pooling