MANAGEMENT

Detailed explanation-1: -Insurers cannot predict which specific individuals will suffer losses. Risk transfer is the process of accepting the consequences of risk. Life insurance typically becomes a higher priority for people as they enter their retirement years and their children marry and start lives of their own.

Detailed explanation-2: -How do insurers predict the increase of individual risks? The law of large numbers helps insurance companies predict the increase of individual risks.

Detailed explanation-3: -Uninsurable risk is a condition that poses an unknowable or unacceptable risk of loss for an insurance company to cover. An uninsurable risk could include a situation in which insurance is against the law, such as coverage for criminal penalties.

Detailed explanation-4: -Calculable Chance of Loss The insurer must be able to calculate both the average frequency and the average severity of future losses with some accuracy. This is necessary so that a proper premium can be charged that is sufficient to pay all claims and expenses and yield a profit during the policy period.

Detailed explanation-5: -Pure risk refers to risks that are beyond human control and result in a loss or no loss with no possibility of financial gain. Fires, floods and other natural disasters are categorized as pure risk, as are unforeseen incidents, such as acts of terrorism or untimely deaths.