Know This Flashcards
1
Q
What is the purpose of Insurance
A
The transfer of risk loss.
It basically transfers, the risk of loss from an individual or business to an insurance company, which then spreads the cost of unexpected losses to many individuals
2
Q
What is the only type of risk that is can be insured
A
Pure Risk
3
Q
What happens as a risk pool increases?
AKA what principle/law is this
A
Future losses become more predictable
“Law of Large Numbers”
4
Q
Indemnity Significance
A
Insured cannot recover more than their loss
Indemnity is sometimes also referred as reimbursement
5
Q
A
