There are four basic components of an insurance premium. Which of the following is not one of those components? A) Losses suffered by the members of the insurance pool B) Law of large numbers C) An allowance for unexpected losses D) Earnings on investments

Question

Quizplus · Accepted Answer

The law of large numbers is a statistical concept that insurers rely on to predict loss occurrences in a large group, not a direct component of an insurance premium. Components of an insurance premium typically include expected losses, administrative expenses, an allowance for unexpected losses, and earnings on investments.

There Are Four Basic Components of an Insurance Premium