Premiums are based on an estimate of the number of parties within the pool who will suffer the risks insured against.

Question

Quizplus · Accepted Answer

Premiums are calculated by estimating the total amount of risk within the insured pool and dividing that amount by the number of parties in the pool who will suffer the risk. This estimation includes factors such as the likelihood of the risk occurring, the severity of the risk, and the cost of any potential claims.

Premiums Are Based on an Estimate of the Number of Parties