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Main Insurance Terms probability

probability



degree of likelihood that something will happen. Probabilities are expressed as fractions (1/2, 1/4, 3/4), as decimals (.5, .25,.75), or as percentages (50%, 25%, 75%) between 0 and 1. For example, a probability of 0 means that something can never happen- a probability of 1 means that something will always happen. The probability of an event is calculated as follows:

p(a) = Number of Outcomes Favorable to the Occurrence of the Event
Total Number of Possible Outcomes
The probability of getting heads in one toss is: p(heads) = 1/(1 + 1) = 1.2. Dictionary of Insurance Terms probability

chance that an event will occur. The foundation of insurance is probability andstatistics. By pooling a large number of homogeneous exposures an insurance company can predict with a given degree of accuracy the chance that a policyholder will incur a loss. The company reflects this expectation in the pure cost of insurance, known as the pure premium. The chance that an event will occur can be expressed as follows:

Probability of Event Occurring=Number of Successful Ways Event Can Occur
Total Number of Ways Event Can Occur

For example, the probability of rolling a six on one die can be expressed as:

P (6)=1
6
Dictionary of Business Terms probability

chance or likelihood that something will happen or has happened.

Referring Terms: calculable change of loss
change of loss
probability of loss
simple probability
theory of probability


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probability