The theory for which insurance is based where a protection is purchased by many whose total payments are pulled together to pay off those few who actually incur a particular loss is called shared risk.

Question

The theory for which insurance is based where a protection is purchased by many whose total payments are pulled together to pay off those few who actually incur a particular loss is called shared risk.​

Quizplus · Accepted Answer

The concept of shared risk is fundamental to the theory of insurance, where many individuals contribute to a common fund (through premiums) to cover the losses of the few among them who actually experience a specific loss. This pooling of resources and risks allows for financial protection against uncertain events.

The Theory for Which Insurance Is Based Where a Protection