Paper 1 · June 2019 · Insurance
The diagram shows arrows labelled premiums flowing into a common fund and arrows labelled claims flowing out of it. What is represented in the diagram?
Aaverage clause
Binsurable interest
Cpooling of risks
Dproximate cause
Explanation
Many people each pay a small premium into one fund, and the few who suffer a loss are paid out of it. Spreading the risk across everyone in that way is the pooling of risks.
ZIMSEC Commerce 4049/01, June 2019, Q27