Final answer:
The price of insurance for each exposure unit is called the premium. Charging an actuarially fair premium to the group as a whole can have consequences for the insurance company.
Step-by-step explanation:
The price of insurance for each exposure unit is called the premium. It is the amount that policyholders pay to the insurance company in exchange for coverage. The premium is calculated based on various factors such as the level of risk associated with the insured object or individual, the coverage amount, and the claims history of the insured group.
For example, if an insurance company wants to charge an actuarially fair premium to the group as a whole rather than to each group separately, it means that the premium would be the same for every member of the group regardless of their individual risk.
This can have consequences for the insurance company as it may result in charging lower premiums to high-risk individuals and higher premiums to low-risk individuals, which could lead to financial losses for the company if claims exceed the premiums collected.