What term refers to a large number of units having the same or similar exposure to loss?

The term that refers to a large number of units having the same or similar exposure to loss is "homogeneous." This concept is fundamental in insurance because it allows insurers to evaluate risks more accurately and price their products accordingly. When a group of insured units (such as individuals, properties, or businesses) shares similar characteristics and risks—such as age, health status, occupation, or environmental exposure—it becomes easier for insurers to predict claims and potential losses.

Insurers can use statistical methods to analyze the collective risk of the homogeneous group, which leads to more equitable premium calculations and helps maintain overall financial stability for the insurance pool. Homogeneity ensures that the losses and claims can be spread more evenly across the insured individuals, which is essential for the sustainability of insurance operations.

The other terms describe different concepts. Critical risks relate to significant hazards that can lead to substantial losses but do not specifically indicate a grouping based on uniform exposure. Adverse selection involves situations where individuals at higher risk are more likely to purchase insurance, leading to an imbalance in the risk pool, while legal hazard refers to situations that increase the likelihood of a claim being made due to legal issues but does not pertain to groups with similar exposure. Each of these terms highlights different aspects of risk management and