Question

What is the fundamental principle of insurance?

a.

Spreading of risk based on the law of large numbers

b.

Providing increased capacity to handle complex risks

c.

Limiting loss arising from a single event causing loss or damage to many risks

d.

Stabilizing the operating results from year to year

Posted under IC85 Reinsurance Management

Answer: (a).Spreading of risk based on the law of large numbers Explanation:The fundamental principle of insurance is spreading of risk based on the law of large numbers.

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