Which of the following statements about risk pooling as a form of insurance is correct?
A) Lending institutions forcing consumers to buy insurance as a condition for financing is not an example of risk pooling.
B) Captive insurers diminish the need for risk pooling.
C) Duplication is a form of risk pooling.
D) In some cases the law requires firms to create them.

Question

Quizplus · Accepted Answer

In some cases, the law requires firms to create risk pooling mechanisms such as workers' compensation programs. Option A is incorrect because requiring insurance as a condition for financing is a form of risk pooling known as forced insurance. Option B is incorrect because captive insurers are a form of self-insurance and do not involve pooling risks with other companies. Option C is incorrect because duplication is not a form of risk pooling but rather a wasteful practice of adding duplicate processes or resources.

Which of the Following Statements About Risk Pooling as a Form