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retention, such as lower expected cost, or it may
be because there is no other choice. E.g, for the
latter - exposure retained because of the nuclear
exclusion found in most property insurance policies.

Risk retention can be partial and total. The nuclear
exposures retained because they cannot be insured, is
an example of total risk retention. The losses within a
deductible layer are an example of partial retention. Some
are given below :
(i) Pooling - Pooling is a special type of risk retention.

Here, entities get together and share their
experiences . Some of the insurers and the reinsurers
retain some of its own exposure to possible loss,
accepts the financial loss . Pools usually collect
contributions in advance of losses and pay for the
losses incurred, from the joint funds. The formula
for the contribution collection and loss payment vary.
Other pools assume that all exposure units have the
same risk, and all losses are shared in same
proportion that the individual member's exposure
have to the total exposure.

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