submitted 1 day ago* (last edited 1 day ago) by to c/world@lemmy.world
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[–] 1 point 11 hours ago (2 children)

The price of an insurance product is divided in 4 parts, the risk, the actuarial adjustment, administrative and distribution costs, and return of capital.

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  • [–] 1 point 10 hours ago (1 child)

    Aren't the risk and the actuarial adjustment the same thing?

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  • [–] 1 point 8 hours ago

    No, the risk is the probability of a claim times the value of a claim. If you just charge that is mathematically proven that the insurance pool is going to fail. The actuarial adjustment is there to create a surplus that guarantee the survival of the pool.

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