The selling of insurance in multiple areas to multiple policyholders to minimize the danger that all policyholders will have losses at the same time. Companies are more likely to insure perils that offer a good spread of risk. Flood insurance is an example of a poor spread of risk because the people most likely to buy it are the people close to rivers and other bodies of water that flood.
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About this Entry
This page contains a single entry by David published on July 11, 2005 11:31 PM.
SOLVENCY was the previous entry in this blog.
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