What does the law of large numbers emphasize regarding predictions?

The law of large numbers is a statistical principle that highlights how the accuracy of predictions improves as the size of the sample group increases. This concept is particularly important in fields such as insurance, where understanding risk is crucial. As the number of observations or the size of the group increases, the results tend to converge on the expected outcome or average.

In an insurance context, when assessing the likelihood of events occurring (like deaths or accidents), larger groups provide a more reliable basis for calculations than smaller groups. This is because random variations tend to balance out over a larger sample size, leading to more stable and predictable outcomes. Therefore, the law of large numbers essentially underscores that with a larger, well-defined population, the predictions made about that group are likely to be more accurate and reliable.