Which of these statements regarding insurance is false?

The statement indicating that as the number of insured units increases, the number of losses decreases is false because the relationship between the number of insured units and the frequency of losses does not inherently imply that losses will decrease. In fact, increasing the number of insured units may lead to a higher overall number of losses, but on a per unit basis, this could reflect a more stable risk pool if managed correctly. The principle of large numbers suggests that as more units are insured, the risk can be more accurately predicted and spread, potentially allowing for lower premiums, but it does not directly correlate to a decrease in the total number of losses.

In contrast, the other statements are true. Insurers indeed use reinsurance as a risk management strategy to mitigate the impact of catastrophic losses, ensuring stability by distributing portions of risk to other insurers. Speculative risk, which involves the possibility of loss or gain, cannot be insured because it is associated with uncertain outcomes that go beyond typical loss situations. Pure risk, defined as the possibility of loss with no chance of gain, is insurable since it pertains to predictable and assessable risks.