Which concept concerns transferring risk from an individual to a group via insurance?

Which concept concerns transferring risk from an individual to a group via insurance?

• A. Insurance
• B. Reinsurance
• C. Indemnity
• D. Hazard

Answer: (A)

The concept described is insurance. It transfers the possibility of a loss from an individual to a group by pooling premiums from many insureds. When a covered loss occurs, funds come from that shared pool, spreading the financial risk across the group and protecting the individual from bearing the full cost alone. Reinsurance is a transfer of risk from one insurer to another, not from an individual to a group. Indemnity refers to restoring the insured to their financial position after a loss, not the method of risk transfer. A hazard is a condition that increases the likelihood or severity of a loss, not the mechanism of risk sharing.

The concept described is insurance. It transfers the possibility of a loss from an individual to a group by pooling premiums from many insureds. When a covered loss occurs, funds come from that shared pool, spreading the financial risk across the group and protecting the individual from bearing the full cost alone. Reinsurance is a transfer of risk from one insurer to another, not from an individual to a group. Indemnity refers to restoring the insured to their financial position after a loss, not the method of risk transfer. A hazard is a condition that increases the likelihood or severity of a loss, not the mechanism of risk sharing.