Reference · Federal sources

Risk distribution among policyholders of a property and casualty insurer)

Rev. Rul. 2005-40 (26 CFR 1.831-1

Publisher: Internal Revenue Service
Edition: Rev. Rul. 2005-40
Last checked: 2026-09-29
Status: US federal government work, public domain

Edition and licensing notes

Publisher. Internal Revenue Service (irs.gov)

Edition. Rev. Rul. 2005-40; retrieved 2026-09-29

Status. US federal government work, public domain.

Read the official text Practice questions from this source

What this document is

Rev. Rul. 2005-40 (26 CFR 1.831-1, risk distribution among policyholders of a property and casualty insurer) is a reference published by Internal Revenue Service (irs.gov). It is one of the documents that insurance license exam questions are written from, including property & casualty practice questions. This page summarizes it and points to the official version, which is the text to rely on.

Sections cited in practice questions

Each practice answer shows the exact passage it comes from. These are sections of this document that questions cite, with a short excerpt from the source text.

Rev. Rul. 2005-40, Law (risk shifting and risk distribution)
“Risk distribution incorporates the statistical phenomenon known as the law of large numbers.”
Rev. Rul. 2005-40, Law (risk distribution)
“By assuming numerous relatively small, independent risks that occur randomly over time, the insurer smooths out losses to match more closely its receipt of premiums.”
Rev. Rul. 2005-40, 2005-2 C.B. 4 (risk distribution)
“Distributing risk allows the insurer to reduce the possibility that a single costly claim will exceed the amount taken in as premiums and set aside for the payment of such a claim.”

Practice this material

Property & Casualty practice test

Questions about this source

Rev. Rul. 2005-40 (26 CFR 1.831-1, risk distribution among policyholders of a property and casualty insurer) is a reference published by Internal Revenue Service (irs.gov). Edition: Rev. Rul. 2005-40; retrieved 2026-09-29.

No. This page summarizes the document and links to the official version. Always rely on the text published by Internal Revenue Service (irs.gov) for the current law.

Practice questions for Property & Casualty cite this document.

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