Why does the assumption of independence of risks matter

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Why does the assumption of independence of risks matter in examples of insurance? What would happen to premiums if the probabilities of houses burning were positively correlated? Cam you think of a situation where they might be negatively correlated?

Reference no: EM13201843

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Why does the assumption of independence of risks matter : Why does the assumption of independence of risks matter in examples of insurance What would happen to premiums if the probabilities of houses burning were positively correlated Cam you think of a situation where they might be negatively correlated

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