Identify the general categories of risk management techniques.
Explain how insurance functions as a system of both transferring and sharing the costs of losses.
The potential financial consequences of certain loss exposures are transferred to an insurer, which, in turn, pays for covered losses and, in effect, distributes the costs of losses among all insureds (tl;dr - all insureds share the costs of everyone's losses).
Identify the mechanism through which individuals or businesses exchange the possibility of a large loss for the certainty of a much smaller, periodic payment.
An insurance policy.
Explain how the law of large numbers enables insurers to make predictions about losses.
According to the law of large numbers, as the number of similar but independent exposure units increases, the relative accuracy of predictions about future outcomes (losses) also increases. Since insurers have large numbers of independent exposure units, they can predict the number of losses that all similar exposure units combined are likely to experience.
Identify three prevalent examples of property-casualty insurance.
Commercial general liability insurance
What are the primary sources of income for insurers?