XCEL Chapter 2

An example of risk sharing would be

Doctors pooling their money to cover malpractice exposures

Which of the following is considered to be an event or condition that increases the probability of an insured's loss?

Hazard

How do insurers predict the increase of individual risks?

Law of large numbers

Insurance companies determine risk exposure by which of the following?

Law of large numbers and risk pooling

All of the following are examples of pure risk EXCEPT?

Losing money at a casino

The cause of a loss is referred to as a(n)

Peril

What is known as the immediate specific event causing loss and giving rise to risk?

Peril

Which of these techniques will remove the risk of losing money in the stock market by never purchasing stocks?

Risk avoidance

People with higher loss exposure have the tendency to purchase insurance more often than those at average risk. This is called?

adverse selection

Insurance represents the process of risk?

transference