Aviation insurers have some difficulty complying with the law of large numbers.

Question

Quizplus · Accepted Answer

The law of large numbers relies on a large number of independent and identically distributed random variables to converge to their expected value. However, aviation accidents are relatively rare events, which makes it difficult for aviation insurers to attain a large enough sample size to comply with the law of large numbers. As a result, aviation insurers may be more susceptible to large, unexpected losses from catastrophic events.

Aviation Insurers Have Some Difficulty Complying with the Law of Large