Insurance works on the law of large numbers, which states that as the number of exposure units increases, the predictability of losses increases—not that the number of losses decreases. Losses still occur, but they become more statistically predictable.
Exact Extract (Virginia Insurance Fundamentals Study Guide): “Law of large numbers—predictability of loss increases as the number of similar exposure units increases. The number of losses does not decrease.”
References (Virginia Documents / Study Guide):
— Virginia General Insurance Concepts, Risk and Principles of Insurance
