Insurance is defined as pooling of risk because many people

  • A with common interest make claims every year
  • B with common risk insure with the same company
  • C with common interest insure with reinsurance company
  • D form common association to help themselves
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The correct answer is B. with common risk insure with the same company

Risk pooling in insurance is a practice where the company groups large numbers of policyholders together to lower the impact of higher-risk individuals by placing them alongside lower risk ones. The company is able to offer higher risk policyholders more affordable coverage as a result.

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