Insurance WAEC

Insurance is defined as a pooling of risk because of many people?

A. with common interest make claims every year
B. with common risk insure with the same company
C. with common interest insure with a reinsurance company
D. form a common association to help themselves

Correct Answer: Option B

B. with common risk insure with the same company

Explanation

Risk pooling in insurance is a practice where the company groups large numbers of policyholders together to lower the impact of higher-risk individuals by placing them alongside lower-risk ones. The company is able to offer a higher risk of policyholders more affordable coverage as a result.

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