Sampling Theory in Casualty Insurance, Introduction and Parts I and II

The fundamental concept of insurance is that the insured is relieved of any concern, not only as to what is going to happen, but also as to what could happen but probably will not. Of course, at the time the insurance is written, neither the insured nor the insurer knows what is actually going to happen. But, even when the period of the coverage has expired, and the actual events are determined, both parties still should understand that the coverage provided was against what might have happened rather than against the specific events that actually did happen. Thus the losses paid by an insurer never actually reflect the hazard covered, but are always an isolated sample of all of the possible amounts of losses which might have been incurred.