Multiple choice

To make accurate statistical estimates, insurance risks must be handled as per the law of

  1. inertia

  2. large numbers

  3. large groups

  4. None of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Risk decreases as the number of exposures increases. This is the most important foundation of insurance. This is called the law of large numbers. This law is critical to understand the nature of risk and how it is managed. 

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