Which of the following impacts the probability of insurance losses?

The probability of insurance losses is significantly influenced by various factors, with hazards being a key component. Hazards refer to conditions or situations that increase the likelihood of loss, which can include physical hazards (like the condition of a property), moral hazards (the risk of loss due to dishonest behavior), and legal hazards (such as the regulatory environment affecting claims). Understanding hazards allows insurers to assess risk more accurately and set appropriate premiums based on the likelihood of claims arising from those conditions.

While policyholder's claims history and market competition are relevant to the overall insurance context, they do not directly impact the probability of loss in the same way hazards do. Claim history pertains to the individual policyholder's past behavior and does contribute to underwriting and risk assessment for future policies, while market competition involves the dynamics and pricing among insurers, which does not directly affect the actual occurrences of losses. Therefore, the emphasis on hazards as the primary factor impacting the probability of insurance losses reinforces the importance of environmental and situational factors in risk assessment within the insurance industry.