Answered

Question 1: Insurance is NOT characterized as which of the following?

A. Transference of risk
B. Pooling of premium dollars
C. Method of risk management
D. As the number of insureds increases, the number of losses decreases



Answer :

GinnyAnswer

Final answer:

Insurance is a method of spreading risk among policyholders to ensure fairness and stability in insurance markets.


Explanation:

Insurance is characterized by the following:

  • Transference of risk
  • Pooling of premium dollars
  • Method of risk management
  • As the number of insureds increase the number of losses decrease

Insurance works by spreading risk among a group of policyholders, ensuring that the average payments in match the average benefits out over time while also addressing factors like moral hazard and adverse selection in insurance markets to maintain fairness and stability.


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