What is the definition of Spread of Risk?
Spread of Risk refers to the sale of act of the insurance company to pool risks from more than one source, that is, to sell insurance policies covering the same risk to as many customers as possible, or selling insurance policies to as many geographic areas as possible.
The insurance company is counting on the fact that with a large number of people buying coverage for the same risk, the likelihood of that risk happening to a majority of the policyholders is small.
Insurance companies look for an attractive spread of risk when choosing the risks to insure. That is why insurance companies are hesitant to offer flood insurance as there is a tendency only for those who have high risk to buy the policies. This means that when the risk happens, there will be a lot of claims filed all at the same time, making flood insurance a poor spread of risk.
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- Stacking
- Standard Risk Class
- Statutory Accounting Principles (SAP)
- Stock Insurance Company
- Straight Life Annuity
- Structured Settlement
- Subrogation
- Substandard Premium Rates
- Substandard Risk Class
- Suicide Exclusion Provision
- Split-Dollar Life Insurance Plan
- Spendthrift Trust Clause
- Specified Disease Coverage
- Solvency
- Soft Market
- Single Premium Policies
- Single Premium Annuity
- Short-Term Disability Income Insurance
- Shared Market
- Sewer Back-Up Coverage