Question
In: Finance
In bearing risk, what disadvantages do insurance companies face?
In bearing risk, what disadvantages do insurance companies face?
Solutions
Expert Solution
The disadvantages that the insurance companies bear is that, as they insure the insured against the risks they have to pay compensation in case the uncertain event actually takes place. It provides compensation in case any kind of loss or damage has occurred to property or death or critical illness of an individual . In case the amount of compensation paid to the insured is more than the amount of premium received by the insurance company, in that case the insurance company suffers a loss for bearing the risk.
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