Registered Insurance Brokers of Ontario (RIBO) Practice Exam

The correct answer is rooted in the principle of underwriting and risk assessment within the insurance industry. Insurers rely heavily on past loss histories because they provide empirical data on the frequency and severity of losses associated with particular risks. By analyzing these historical patterns, insurers can develop statistical models that predict future losses for similar risks. This historical analysis helps in determining appropriate premium levels, coverage terms, and underwriting criteria to effectively manage their risk exposure.

While market trends, customer feedback, and economic conditions may play supportive roles in the overall assessment of risks, they do not provide the specific, quantitative data that past loss histories offer. Market trends can influence demand and pricing strategies, customer feedback can enhance service delivery and products, and economic conditions can affect overall risk environments; however, it is the historical data regarding actual claims that forms the foundation for estimating future insured losses.