The idea of an insurance company "pooling" the risk means that
A) the risk is completely eliminated from society.
B) the insurance company requires buyers to pay a large deductible.
C) the risk is spread over a large population.
D) the insurance company insists on a pooling equilibrium.
E) moral hazard and adverse selection are eliminated.

Question

Quizplus · Accepted Answer

The concept of pooling risk in insurance means that the risk is spread over a large population. By doing so, the burden of loss is shared among many people, reducing the risk for any particular individual. This helps ensure that insurance remains affordable and accessible to people who may need it.

The Idea of an Insurance Company "Pooling" the Risk Means