How did insurance companies hope to make money

Question

By insuring many ships, the insurance company hoped to collect more in premiums than it would pay in losses
By insuring many categories of cash crops, the insurance company hoped to collect more in premiums than it would in losses
By insuring many ships, the insurance company hoped to use the principles of astrolabe to its advantage
By insuring just a few ships, the insurance company hoped to get lucky and choose ships and voyages that would be successful

Answer 1

Insurance companies primarily sought to make money by insuring many ships or assets, hoping to collect more in premiums than they would pay out in losses. This is reflected in your first option:

"By insuring many ships, the insurance company hoped to collect more in premiums than it would pay in losses."

This model of spreading risk is fundamental to the insurance industry, as it allows companies to profit by managing the collective risk of insuring a large number of clients. The other options either misrepresent the principles of insurance or suggest a strategy that is not typically followed in the industry.