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According to the law of large numbers, Curran Insurance Group can ________ by charging each of...

According to the law of large numbers, Curran Insurance Group can ________ by charging each of its policyholders a premium close to their expected loss as long as they have a large pool of independent and identical risks.

  • : break even

  • B : lose revenue

  • C : pool risk

  • D : estimate risk

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Answer #1

Estimate RISK- law of large number will always help in better risk pooling because there will be a larger population which is available and the loss will be mitigated to certain extent by pooling of the risk of various investors together.

It is not about breaking even or losing the revenue or risk pooling because it is about charging a premium close to expected loss as long as they have a large pool of independent and identical risks.

Correct answer is option (d) estimate risk.

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