Which of the following is NOT a principle of insurance?

The correct answer is retention, as it is not traditionally categorized as one of the fundamental principles of insurance. The principles of insurance include indemnity, subrogation, and utmost good faith, each serving a specific purpose in the realm of insurance contracts.

Indemnity ensures that the insured is compensated for losses without profiting from the insurance, thereby upholding the insurance contract's integrity. Subrogation allows insurers to pursue third parties responsible for a loss after compensation has been given to the insured, thereby helping to control costs and prevent the insured from claiming twice for the same loss. Utmost good faith, also known as 'uberrima fides,' requires both parties in an insurance contract to act with complete honesty and disclose all relevant facts.

Retention, while it does play a role in risk management and can be part of an insurance strategy (such as self-insuring a portion of a risk), is not one of the foundational principles guiding the practice of insurance. Therefore, it stands out as not being a core principle in the context of insurance fundamentals.