Define 'catastrophe' in terms of insurance.

In the context of insurance, a 'catastrophe' is defined as a large-scale disaster that leads to significant losses for individuals, property, and businesses. This definition captures the essence of what a catastrophe entails in the insurance realm, where such disasters can include natural events like hurricanes, earthquakes, and floods, or man-made incidents that cause extensive damage.

The importance of this definition comes into play regarding insurance policies and coverage. Insurers must assess the potential impact of catastrophes on their operations and the financial stability of their underwriting practices. A catastrophe typically results in a surge of claims that can strain resources, necessitate a reevaluation of risk models, and drive discussions about premium adjustments and coverage limits.

The other options don't align with the standard definition of a catastrophe in insurance. Minor events, premium calculations, and claims systems address different aspects of insurance but do not encapsulate the severe, widespread impact implied by the term 'catastrophe.'