Which of the following would be most important in making the decision to provide insurance?
A) Whether or not the probability distribution is normal
B) The current market interest rate
C) Whether or not the losses are independently distributed the accident
D) All are equally important

Question

Quizplus · Accepted Answer

Whether or not the losses are independently distributed from the accident is the most important factor in making the decision to provide insurance. This is because insurance companies rely on the principle of large numbers which assumes that losses will be independently distributed, allowing them to accurately predict future losses and set premiums accordingly. The normality of the probability distribution and current market interest rates may also be considered, but they are not as critical as the independence assumption.

Which of the Following Would Be Most Important in Making