What does the formation of syndicates allow members to do?

The formation of syndicates is primarily structured to enable members to share the liability and risk associated with underwriting insurance. When individuals or organizations come together to form a syndicate, they pool their resources, which allows them to collectively take on larger and more substantial risks than any single member could manage alone.

This collaborative approach spreads the financial burden across all members, which can reduce the impact of a significant loss on any one entity. By sharing risks, syndicates help to stabilize insurance operations and make it feasible to cover larger potential claims. This model is particularly beneficial in industries where risk can vary greatly, as the diverse nature of syndicate members allows for a more balanced risk profile overall.

While this structure can also lead to benefits like cost savings or the ability to create new products, the core function and primary advantage of syndicates is their capacity to share risk and liability effectively.