Alberta General Insurance Level 1 Practice Exam

Question: 1 / 400

What must insurers do to survive and make a profit?

Offer coverage only to high-risk individuals

Ensure the insureds incur more losses than premiums paid

Seek insureds likely to incur less losses than premiums paid

Insurers must seek insureds who are likely to incur less losses than premiums paid in order to survive and make a profit. Option A is incorrect because offering coverage only to high-risk individuals would increase the amount of claims and lead to higher losses for the insurer. Option B is incorrect because if the insureds incur more losses than premiums paid, the insurer would not make a profit. Option D is incorrect because investing all capital into a single venture is a high-risk strategy and could lead to financial losses for the insurer. Therefore, option C is the best choice as it aligns with the goal of insurers to minimize losses and generate profits.

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Invest all capital into a single venture

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