Risk Management for Enterprises and Individuals (open textbook), section 6.03: Nature of Insurance
Edition and licensing notes
Publisher. LibreTexts Business (biz.libretexts.org), from the open textbook of the University of Minnesota Libraries / Saylor (Baranoff, Brockett and Kahane)
Edition. CC BY-NC-SA 3.0 open textbook, ca. 2009-2012; page as served 2026-09-29
Status. Creative Commons Attribution-NonCommercial-ShareAlike 3.0 (LibreTexts / University of Minnesota Libraries).
What this document is
Risk Management for Enterprises and Individuals (open textbook), section 6.03: Nature of Insurance is a reference published by LibreTexts Business (biz.libretexts.org), from the open textbook of the University of Minnesota Libraries / Saylor (Baranoff, Brockett and Kahane). 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.
- Risk Management for Enterprises and Individuals, section 6.3, "Nature of Insurance"
“In order for the law of large numbers to work, the pooled exposures must have approximately the same probability of loss”
- Risk Management for Enterprises and Individuals, section 6.3, "The Law of Large Numbers"
“The insurer still has some risk or variability around the average. Nevertheless, the risk of an insurer with more exposures is relatively lower than that of an insurer with fewer exposures under the same expected distribution of losses”
Practice this material
Questions about this source
More Federal sources sources
- Coverage for Pre-existing Conditions (Affordable Care Act) - HealthCare.govFederal guidance
- 20 C.F.R. § 404.1520 -- Evaluation of Disability in General (the five-step sequential evaluation process)Regulation
- Parts of Medicare (Medicare & You / medicare.gov)Federal guidance
- Continuation of Health Coverage (COBRA) - U.S. Department of LaborReference
- Portability of Health Coverage (HIPAA) - U.S. Department of LaborReference
- Fair Credit Reporting Act - 15 U.S.C. § 1681a (Definitions)State statute
- 15 U.S.C. s. 1681b: FCRA permissible purposes of consumer reportsState statute
- 15 U.S.C. s. 1681c: FCRA requirements relating to obsolete information in consumer reportsState statute