State insurance regulators have sometimes reacted by passing rules that attempt to set low premiums for insurance. But over time, ___________________________ must hold: the average amount received by individuals must equal the average amount paid in premiums.
A) the fundamental law of caveat emptor
B) the fundamental law of insurance
C) the fundamental principle of profitability
D) the fundamental principle of actuarial fairness

Question

Quizplus · Accepted Answer

The fundamental law of insurance states that the average amount received by individuals must equal the average amount paid in premiums. This is because insurance companies must be able to cover their costs in order to stay in business.

State Insurance Regulators Have Sometimes Reacted by Passing Rules That