Which term is used to describe the risk of loss associated with all policyholders?

The term "aggregate risk" refers to the total risk of loss that can arise from a group of policyholders, often assessed across an entire portfolio of insurance policies. This concept captures the likelihood and potential impact of combined losses that the insurer may face due to claims. It essentially provides a broader perspective on risk, as it aggregates the exposure to loss attributed to a collection of individuals covered by insurance policies.

In contrast, "policyholder risk" typically refers to the risk associated specifically with an individual policyholder, while "collective risk" may seem similar but usually emphasizes a shared risk among a defined group rather than all policyholders as a whole. "Individual risk," as the term suggests, focuses on the risk affecting a single policyholder, which is not what we seek when discussing risks across all policyholders. Therefore, the focus on the collective implications of risk exposure for insurers provides a more comprehensive understanding of how loss might manifest at a portfolio level, making aggregate risk the correct term in this context.