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