An automobile insurance company on average charges a premium that:
A) equals the expected loss from each driver.
B) is less than the expected loss from each driver.
C) is greater than the expected loss from each driver.
D) equals 1/(expected loss) of each driver.

Question

Quizplus · Accepted Answer

Automobile insurance companies charge a premium that is greater than the expected loss from each driver in order to cover their own administrative costs and to make a profit.

An Automobile Insurance Company on Average Charges a Premium That