Question

In: Operations Management

Which characteristics below are distinct for insurance? May be more than one option a. Pooling of...

Which characteristics below are distinct for insurance? May be more than one option

a. Pooling of losses – is the heart of insurance. Pooling means that losses are spread over a large group of individuals so that each individual realizes the average loss of the pool

b. Payment only for random losses – is one that is unforeseen and unexpected and occurs as a result of chance

c. Risk transition – a transition of a risk from an insured to an insurer, which typically is in a better financial position to bear the risk than the insured because of the law of large numbers

d. Identification – which is the reimbursement of the transfer of a risk from an insured to an insurer, which typically is in a better financial position to bear the risk

Solutions

Expert Solution

a. Pooling of losses – is the heart of insurance. Pooling means that losses are spread over a large group of individuals so that each individual realizes the average loss of the pool

b. Payment only for random losses – is one that is unforeseen and unexpected and occurs as a result of chance


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