In: Operations Management
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
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