Editing Openai/695d4253-5060-8005-95db-586e777927f4 (section)

==== Key concerns: ====
* Asymmetric risk sharing: Green gives away upside when experience is good, but still absorbs full downside when experience is bad. That is equivalent to giving the customer a free call option on results, which reduces expected profit and increases required capital.
* Volatility / capital strain: With large groups, random fluctuation is smaller than small groups, but severity risk (shock claim years) remains material; removing upside reduces Green’s ability to offset bad years.
* Lapse/anti-selection risk: Groups may stay after good years (collect refunds) and shop/terminate after bad years, worsening Green’s long-run results.
* Settlement lag & disputes: Requires fully developed claims and clear definitions (runout, pooling, eligibility changes), increasing administrative burden and the risk of disagreement.
* Pricing implication: If offered, the expected cost of the refund feature should be explicitly priced (either via higher premium or explicit risk charge), otherwise target LR will not be achieved.