What is the term used for units that are uniform in characteristics for insurance purposes?

The term that best describes units that are uniform in characteristics for insurance purposes is "homogeneous exposure units." This concept is fundamental in the field of insurance because it allows insurers to group similar risks together, enabling them to assess the likelihood of a loss and set appropriate premiums accordingly.

When exposure units are homogeneous, it means that the risks associated with these units are similar, allowing for more accurate predictions regarding loss frequency and severity. This uniformity is essential for the viability of insurance products, as it ensures that the law of large numbers can be applied effectively. This principle helps insurers stabilize their loss experience and maintain financial solvency.

Other terms mentioned do not pertain directly to the idea of units being uniform in characteristics. Adverse selection refers to a situation where there is an imbalance of information between buyers and sellers of insurance, often leading to higher risk customers being more likely to purchase insurance. Materiality is a concept in both insurance and finance that deals with the relevance of specific information to decision-making, while insufficient cash does not relate directly to the classification of exposure units in the context of insurance.