What is the principle that ensures that similar risks are treated equally under a group policy?

The principle that ensures that similar risks are treated equally under a group policy is the Sharing Principle. This concept is foundational in insurance, particularly in group policies, as it emphasizes the idea that individuals within the same risk group should contribute equally to the pool from which claims are paid. By spreading the risks among a larger group, individuals with similar risk profiles are able to share the financial burden, which helps in providing coverage at a more stable and potentially lower cost for each participant.

The Sharing Principle promotes fairness among group members, as it means that those who are relatively healthier or less at risk are essentially subsidizing those who may be more at risk, but only to the extent that their risks are comparable. This shared risk approach is what allows group insurance policies to function effectively, ensuring that members with similar risks are treated in a consistent manner, which is fundamental to building trust and stability in group insurance arrangements.