Law of Large Numbers is the basis for successfully running Insurance Business. If historical data is collected for several years for life insurance for example and the information like how many people died during the policy, how many claims were made etc is available then it can be deduced that on average what is the percentage of claims that will possibly be made for an insurance policy (with certain deviation of course). On this basis cost can be calculated and premium amount can be decided. This same concept applies to Car insurance, property insurance, health and other types of insurance […]