Which of the following is a true statement?
A) Liability risks are risks associated with building calamities.
B) Theft is a diversifiable risk.
C) Most individuals in the industrialized countries carry no insurance.
D) The Law of Large Numbers is used in Risk Pooling.

Question

Quizplus · Accepted Answer

The Law of Large Numbers is used in Risk Pooling to predict the frequency and severity of future losses, and to determine the appropriate premium to charge for insurance. Option A is incorrect because liability risks refer to legal and financial responsibilities arising from injuries or damages caused to another person or property. Option B is incorrect because theft is a non-diversifiable risk as it is impossible to eliminate the risk completely by diversifying one's portfolio. Option C is incorrect because most individuals in industrialized countries do carry insurance for various risks such as health, life, property, and liability.

Which of the Following Is a True Statement