ABSTRACT
This is a statistical concept that states that the larger the sample population insured, the more accurate the predictions of the claims of that sample, and the smaller the expected deviation in actual and predicted claims. As a general principle it means that, in the long run, the average (mean) of a long series of observations may be taken as the best estimate of the ‘true value’ of a variable. In other words, what is unpredictable and chancy in case of an individual is predictable and uniform in the case of a large group. This law forms the basis for the expectation of probable-loss upon which insurance premium rates are computed.
