How do insurers typically manage risk in group insurance plans?

Insurers manage risk in group insurance plans primarily by establishing minimum participation rates. This strategy is crucial because it ensures that a sufficient number of individuals enroll in the plan, allowing for the pooling of risk across a larger group. A higher number of participants typically leads to a more balanced risk profile; it helps mitigate the impact of adverse selection, where individuals who anticipate higher healthcare costs are more likely to seek insurance.

By requiring a minimum participation rate, insurers can achieve a diverse pool, which is essential for maintaining stable premiums and financial viability. It also encourages healthy individuals to enroll, helping to balance out the costs associated with those who may have more significant health issues.

The other options, such as requiring medical exams for all members or limiting the maximum age of participants, do not align with the group insurance model's fundamental principle of pooling risks across diverse individuals. Moreover, focusing solely on healthy individuals contradicts the nature of group insurance, which is designed to cover a wide spectrum of health statuses to ensure collective risk management rather than cherry-picking healthier individuals.