The principle that allows actuaries to predict losses with reasonable accuracy as the number of similar exposure units grows is:
a.The rule of adhesion
b.The doctrine of indemnity
c.The principle of utmost good faith
d.The law of large numbers
Explanation
The law of large numbers is the statistical foundation of insurance: as the number of similar exposure units observed grows, actual losses approach the predicted average. Indemnity, utmost good faith, and adhesion describe legal features of the contract, not a statistical prediction tool.
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