To make accurate statistical estimates, insurance risks must be handled as per the law of

A. Inertia

B. Large numbers

C. Large groups

D. None of the above

Answer: Option B

Solution(By Examveda Team)

To make accurate statistical estimates, insurance risks must be handled as per the law of large numbers. In the insurance industry, the law of large numbers produces its own axiom. As the number of exposure units, or policyholders, increases, the probability is higher that the actual loss per exposure unit will equal the expected loss per exposure unit.