Insurance companies engage in _______________ when they take on liability for the cost of any necessary health care for many people,only some of whom will in fact be struck by health shocks in a given year

Question

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Risk pooling is the practice of sharing risk among a large population through insurance. In this case, insurance companies are taking on liability for the cost of healthcare for a group of people, even though only some of them are likely to require medical treatment in a given year. By pooling risk, insurers can spread the financial burden of healthcare costs across a broader population, which allows them to offer more affordable premiums and protect individuals from the potentially catastrophic financial impact of a serious illness or injury.

Insurance Companies Engage in _______________ When They Take on Liability