Sharing the financial consequences associated with risk in the insurance industry is sometimes called

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Risk pooling is the process of sharing the financial consequences of risk among a group of individuals or companies. In the insurance industry, this is achieved through the payment of premiums, which are collected from policyholders and then used to pay for claims when they arise. As more people participate in the pool, the risk of a catastrophic loss is spread out among a larger group, reducing the impact on any one individual or company. This allows insurers to offer coverage at a reasonable cost and helps to make insurance more accessible to a wider range of people.

Sharing the Financial Consequences Associated with Risk in the Insurance