WebCE Quizzes: General Insurance & Life Insurance Buying life or health insurance is an example of which risk management technique? risk avoidance risk reduction risk retention risk transfer - answers-risk transfer What is the mathematical concept of probability that helps insurers estimate the statistical likelihood of mortality or morbidity losses at any given age? law of large numbers underwriting principle law of probability actuarial principle - answers-law of large numbers A person who refuses to engage is risky activities like rock climbing for fear of injury or death is demonstrating which risk management technique? risk avoidance risk reduction risk retention risk sharing - answers-risk avoidance Which of the following is an insurable risk? the possibility of losing money in stock investments the possibility of losing money gambling in Las Vegas the possibility of becoming disabled and unable to earn an income the possibility of one's home value decreasing due to a drop in market prices - answers-the possibility of becoming disabled and unable to earn an income All the following statements regarding reinsurance are correct EXCEPT: Reinsurance is a risk-sharing process used by insurance companies. Claims are paid to the policyowner separately by each insurer participating in the reinsurance agreement.