New York Child Abuse Identification and Reporting Practice Exam

What is the minimum number of participants generally required to define a true "group" for insurance purposes?

1. 5

2. 7

3. 10

4. 15

The correct answer is: 10

In the context of defining a true "group" for insurance purposes, having a minimum number of participants is essential for several reasons. A group typically needs to be large enough to spread risk among its members, which allows for more stable premiums and coverage options. The number ten is commonly recognized in the insurance industry as a standard minimum because it represents a sufficient pool of individuals to diversify risk and create a feasible risk assessment model. Groups with fewer participants may face challenges such as higher volatility in claims, leading to higher insurance costs or difficulty in obtaining coverage. Thus, the threshold of ten helps ensure that the group can be sustainable and effective in the long run while meeting the insurer's criteria for a manageable risk group.