Insurance chapter 2

Insurance

the pooling of fortuitous losses by transfer of such risks to insurers, who agree to indemnify insureds for such losses, to provide other pecuniary benefits on their occurrence, or to render services connection with the risk

Fortuitous loss

One that is unforeseen, unexpected, and occur as a result of chance

Adverse selection

the tendency of persons with a higher -than-average chance of loss to seek insurance at standard rates

Types of private insurance

Life and health, property, liability, casualty

Casualty insurance

refers to insurance that covers whatever is not covered by fire, marine, and life insurance

Expense loading

The amount needed to pay all expenses, including commissions, general admin expenses, state premium taxes, acquisition expenses, and an allowance for contingencies and profit

The law of large numbers

The greater the number of exposures, the more closely will the actual results approach the probable results that are expected from an infinite number of exposures