However, some pure risks are not insurable. The concept of insurable risk underlies nearly all insurance decisions. 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. Building in flood zones are difficult to insure by private insurers because the ideal requirements of an insurable risk are difficult to meet. a. Identify the ideal requirements of an insurable risk. Students also viewed these Corporate Finance questions. the loss should be within the insured's control. Buildings in flood zones are difficult to insure by private insurers because the ideal requirements of an insurable risk are difficult to meet. The Nature of Insurance; 3. 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. 2-3- Characteristics of an Ideally Insurable Risk (requrements of an Insurable Risk) Private insurers insure only pure risks. Identify the ideal requirements of an insurable risk. Buildings 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. Identify the ideal requirements of an insurable risk. The answer in effect, insurance is not always available as a method of handling risk. Types of Insurance and Insurers - Part 1; 6. Which of the following statements is (are) true with respect to insurance and gambling? So we ask this question. Identify the ideal requirements of an insurable risk. Characteristics of an Ideally Insurable Risk Private insurers generally insure only pure risks. Are all pure risks insurable by insurance companies? A principle of insurance holds that only a small portion of a given group will experience loss at any one time. Types of Insurance and Insurers - … 1.4.4 Elements of Insurable Risk. The second example in Table 6.1 "Examples of Insurable and Uninsurable Risks" is the peril/risk of fire. From the viewpoint of a private insurer, an insurable … - Selection from Principles of Risk Management and Insurance, 13th Edition [Book] All of the following are ideal requirements that must be met for a risk to be privately insurable EXCEPT. An insurable risk refers to a potential situation in which an insurance company evaluates the risk and determines insurability. The major cost of social insurance favor low-income groups such as social security, unemployment’s, and workers compensation. An insurable risk is a risk that meets the ideal criteria for efficient insurance. b. Why are most market risks, financial risks, production risks, and political risks … 3. a. Ideal Requisites for Insurability – Part 1; 4. One of the criteria for an insurable risk is that it NOT be catastrophic. 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 … 4 marks 2. Fire is an insurable risk because it meets all the required elements. Ideal Requisites for Insurability - Part 2; 5. Which of the requirements of an insurable risk are not met by the flood peril? 1. You are required to answer the following questions. The general insurance industry is characterised by cyclical market conditions, alternating between hard … Discuss the ideal requirements of an insurable risk. Insurers only insure pure risks, however not all pure risks are insurable. a. 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