The Law Of Large Numbers
We repeat
again that the insurance that reduces the risk. Maybe it sounds strange that a
merger of the individual risks can reduce the risk. The principles that explain
these symptoms in mathematics of the "law of large numbers".
Sometimes called a "Law of averages" or "legal
possibilities". Indeed the law is only one part of the subject (subject)
"possibilities". The latter was not law at all but one branch of mathematics.
In the 17th
century, European mathematics experts following the death of the tables. From
this investigation they found that the percentage of men and women in between
each birth year tend toward a certain amount if enough konstante-number of registered
births. In the 19th century Simeon Denis Poisson named this principle is the
"law of large numbers". This law is based on the obvious occurrence
of events. What seems to be a random occurrence events (random = arbitrarily,
irregularly) in individual events is simply because not enough of his or her
full knowledge about this is not what is expected to happen. For practice, the
law of large numbers can be expressed as follows: increase the number of 30,
grew close to the results of an estimated 30 minutes if the number is not
limited. This means that if you throw a coin a number of times, the results you
get will be close to half of one side and the other half the other side. (This
is a theoretical possibility if a coin were hurled at an infinite number of
times).
In other
words, events that it seems completely coincidentally, will occur according to
the stunning regularity when the number of events observed is enlarged. A car
speeding on 4 July. The front tire is leaking and the car crashed into the sidewalk
and bolted it upside down, killing his driver and three passengers. If the
driver was not speeding, if flawed, if car tires are not defective, the goods
times this accident would not have happened. If the wife of the driver was not
changing his mind at the last moment, he and two of his children would not be
in the ill-fated car was. It seems impossible to foresee this particular crash,
but predicted a National Salvation Council with very carefully how many
motorists who will meet his end on 4 July. Even more careful estimates of
annual deaths to this Council, because the increase of the number of 30 against
one loss, then grew close to results-the results with the possibility of an
underlying.
A similar
way, the insurance company has the statistics of millions of people will be
able to tell you the amount almost exactly those people who will die in a given
period of time. Of course grow long period features, increased his predictions
were meticulous. This seems incredible similarities until we remember that
increasing the number of 30, then the incidence of loss will be close to the
underlying possibilities.
The law of
large numbers is becoming a basic insurance. With this law, the impossibility
to predict individual events can be possible when a large number of events
observed. By applying this conclusion against insurance, then we get for
example, every year the House caught fire, going on the death and the crash. If
we set aside a small group of Genesis of Genesis, we might get that there is a
big difference between a real disadvantage with average loss predicted. But
with a large group of 30 in number, not a matter of guessing job forecast but
it is a mathematical calculation.
Leader
insurance companies utilize the law of large numbers and trying to incorporate
into his books as much as possible the number of 30 to make a forecast. In
addition, insurance companies want this 30 units spread out in a way that
minimised the possibility of deviations from the base.
We have been
told that insurance does not entirely eliminate the risk from the public
because it is impossible get a total 30 units are not limited. That is why
there is always a discrepancy between actual results from estimated.
Furthermore, the statistical figures are the basis of the forecast is not
entirely perfect if not perfect is no reason to believe that the pattern of
loss of time to come will be the same as the pattern now because in such a
large number of dynamic elements involved. The possibility of moral hazard
(Hazard) and morale may also affect the forecast losses.
