Which term refers to the risk-sharing arrangement among a group of policyholders in an insurance setup?

The term that refers to the risk-sharing arrangement among a group of policyholders in an insurance setup is pooling. Pooling is a fundamental concept in insurance that allows individual policyholders to collectively share financial risks. When many policyholders contribute premiums to a common fund, the collective resources can cover the losses of those who experience claims. This system enables insurers to spread risk over a larger group, thereby providing a safety net for the members. Pooling facilitates the ability to predict losses statistically and manage claims more effectively while providing financial protection to all participants involved.

In contrast, underwriting involves assessing risks and determining the terms of coverage for individual applicants, which does not encompass the collective sharing of risk. Bonding typically refers to a form of surety insurance that guarantees contractual performance rather than risk-sharing among general policyholders. Underinsurance pertains to having insufficient coverage to fully mitigate risk, which does not relate to the collective risk arrangement among policyholders.