Types of Insurance and Insurers - … Why are most market risks, financial risks, production risks, and political risks … However, some pure risks are not insurable. Buildings in flood zones are difficult to insure by private insurers because the ideal requirements of an insurable risk are difficult to meet. Types of Insurance and Insurers - Part 1; 6. Which of the following statements is (are) true with respect to insurance and gambling? Are all pure risks insurable by insurance companies? 1.4.4 Elements of Insurable Risk. Identify the ideal requirements of an insurable risk. a. Insurers only insure pure risks, however not all pure risks are insurable. Fire is an insurable risk because it meets all the required elements. CHARACTERSITICS OF AN IDEAL INSURABLE RISK Economically feasible premium So people can afford to buy; Premium must be substantially less than the face value of the policy. Identify the ideal requirements of an insurable risk. 1. a. One of the criteria for an insurable risk is that it NOT be catastrophic. The concept of insurable risk underlies nearly all insurance decisions. the loss should be within the insured's control. Characteristics of an Ideally Insurable Risk Private insurers generally insure only pure risks. 4 marks 2. Identify the ideal requirements of an insurable risk. b. Ideal Requisites for Insurability - Part 2; 5. A principle of insurance holds that only a small portion of a given group will experience loss at any one time. Even this peril can be catastrophic, however, if fires cannot be controlled and a large geographical area is damaged, such as the large fires in Colorado and Arizona in 2002. The general insurance industry is characterised by cyclical market conditions, alternating between hard … Ideal Requisites for Insurability – Part 1; 4. The second example in Table 6.1 "Examples of Insurable and Uninsurable Risks" is the peril/risk of fire. Discuss the ideal requirements of an insurable risk. The major cost of social insurance favor low-income groups such as social security, unemployment’s, and workers compensation. 3. An insurable risk refers to a potential situation in which an insurance company evaluates the risk and determines insurability. All of the following are ideal requirements that must be met for a risk to be privately insurable EXCEPT. So we ask this question. This typically requires that the risk have a few basic elements, including the fact that the risk must be random or due to chance and … 2-3- Characteristics of an Ideally Insurable Risk (requrements of an Insurable Risk) Private insurers insure only pure risks. a. The Nature of Insurance; 3. Building in flood zones are difficult to insure by private insurers because the ideal requirements of an insurable risk are difficult to meet. However, some pure risks are not privately insurable. 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