Chapter One: Introduction to Insurance Flashcards
1
Q
The major fuction of insurance is to achieve a spread of risk. Explain what is meant by “spread of risk”.
A
“The losses of a few are shared among many”: the large losses of a few are distributed through an insurer to a large number of premium payers, each of whom pays a relatively small amount.
2
Q
An analysis of the definition of insurance reveals five important points. Identify and provide a brief explanation for each.
A
