Principles of Microeconomics / Unit 15 MIC 1405 short lesson, about 20 seconds
Insurance, Pools and Risk Groups
Captions available
The idea
Insurance pools premiums priced on group loss probability and pays those who suffer loss; over time premiums must cover claims, costs and profit. A risk group shares one risk; a premium equal to its expected claim is actuarially fair.
In practice
A pooled premium makes safe drivers pay for risky ones.
Where people slip
Nobody can predict who will crash, and any group mixes safer and riskier.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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