Spread of risk

{
  "id": "MLC-T-INS-003741",
  "term": "Spread of risk",
  "field": "Insurance and risk management",
  "definition": "The fundamental insurance principle of distributing potential losses among a large number of policyholders, so that the financial impact on any single member is minimized. By pooling premiums from many insureds who face similar perils, the insurer accumulates a fund to pay for the losses that a few will experience. This concept, also known as risk distribution, is a legal requirement for a contract to be considered insurance for tax purposes.",
  "url": "https://mlchart.com/terminology/insurance/spread-of-risk/"
}