Question

State insurance regulators have sometimes reacted by passing rules that attempt to set low premiums for insurance. But over time, ___________________________ must hold: the average amount received by individuals must equal the average amount paid in premiums.

A. the fundamental law of caveat emptor
B. the fundamental law of insurance
C. the fundamental principle of profitability
D. the fundamental principle of actuarial fairness

Answer 1

Answer: b)

The Fundamental Law of Insurance.

Explanation: The Fundamental Law of insurance is the practice of law surrounding insurance, and the nature of contract is a fundamental principle of insurance contract.

An insurance contract comes into existence when one party or a person makes an offer or proposal of a contract and the other party or person accepts the proposal. A contract should be simple and compressible for it to be a valid.

There are so many insurance practices like health insurance, automobile insurance, life insurance and others.