Distribution of "Shock" Losses in Workmen's Compensation and LiabilityInsurance

Early in our studies we learn that the institution of insurance rests upon the paradox that uncertainties, when taken in the aggregate, produce certainty. It is the function of the insurer to assume the individual uncertainties of its policyholders and, by pooling these, to commute them into a single and definite certainty. Such is the process which creates the confidence so indispensable to the transaction of the world's business.