Random Sample
Definition of "Random sample"
Sample of n elements selected from a population of A? elements in such a way that the sample has essentially the same characteristics as the population. The random sample serves as the foundation of all probability theory as it relates to probability in sampling. In theory, all subsets drawn from the same sample have an equal chance of being drawn. Sampling is extremely important to the calculation of premium rates. For example, if the insurer wants to predict the probability that a wood-frame house will burn, the sample must be drawn from the population of wood-frame houses, not brick-frame houses.
Popular Insurance Terms
Computer system established by London trade associations for processing insurance policies. The work of LIMNET involves the notification and settlement of insurance policy claims. ...
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Actuarial equivalent method of calculating the premium rate through the development of the following equation: probability that the event insured against occurs x face amount of policy x ...
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