Requirements Of Insurable Risk
Definition of "Requirements of insurable risk"
- a large number of homogeneous exposures (in order for the deviation of actual losses from expected losses to approach zero, and thecreditability of the prediction to approach one).
- loss must be definite in time and amount.
- loss must be fortuitous. An insured cannot cause the loss to happen; it must be due to chance.
- must not be an exposure to catastrophic loss; risks must be spread over a large geographical area to prevent their concentration, REINSURANCE often is used to spread potentially catastrophic risks.
- premium must be reasonable in relation to the potential loss. In theory, one could even insure against a pencil point breaking, butthe premium would be much greater than any possible loss.
Popular Insurance Terms
Probable number of times that a specified event is likely to occur. For example, if E is the event, then the odds for E occurring are X to Y according to the following relationship: P (E) ...
Information needed for underwriting a life insurance policy, such as an applicant's age, weight, height, and build; personal and family health record; occupation; and personal habits. These ...
Coverage for suits brought by a plaintiff as the result of bodily injury incurred while using an elevator on the insured's premises. ...
Distribution of a deceased beneficiary's share of an estate among that beneficiary's children. Contrast with per capita. ...
Same as term Annuity: contract sold by insurance companies that pays a monthly (or quarterly, semiannual, or annual) income benefit for the life of a person (the annuitant), for the lives ...
Conditions found in employee benefit plans such as pensions, under which minimum requirements, such as 20 years of service, must be met by an employee to qualify for benefits. ...
Coverage for robbery of the payroll of a business. Coverage applies to money and checks from the time the payroll is withdrawn from the bank until it is distributed to the employees, ...
Form of insurance whereby the buyer (reinsurer) assumes the entire obligation of the cedent company, effected through the transfer of the policies from the cedent to the books of the ...
Fund that concentrates primarily on short-term government securities, certificates of deposit with maturities less than one year, and high-quality interest-bearing corporate debt. The fund ...
Have a question or comment?
We're here to help.