Asked by Natasha De Freitas on Jun 12, 2024
Verified
A fair insurance policy is one in which the premium equals the expected value of the claim.
Fair Insurance Policy
A policy that is considered equitable, offering terms and conditions that are reasonable and just for both the insurer and the insured, without exploiting any party.
Premium
An amount paid for an insurance policy, reflecting the cost of obtaining insurance coverage.
Expected Value
A calculated average of the possible outcomes of a variable, taking into account the likelihood of each outcome.
- Comprehend the financial logic for risk aversion and its consequences in insurance sectors.
- Acquire knowledge of the fundamental concepts underlying the formulation of insurance policies to reduce negative consequences.
Verified Answer
Learning Objectives
- Comprehend the financial logic for risk aversion and its consequences in insurance sectors.
- Acquire knowledge of the fundamental concepts underlying the formulation of insurance policies to reduce negative consequences.
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