Difference between uninsurable and insurable risks give example of how the hollard explain these concepts to their clients?
Answers
Insurable risk
Insurable risk in which, the insurer calculates and estimates the future loss. He then insures against as it is possible to collect. Previous statistics are taken to estimate the premium. It covers the loss but not gain. In Insurable risk, the insurer can forecast and measure the risks. Example: life insurance, motor insurance.
In insurable risk, the occurrence can be concluded by taking the frequency of past occurrences.
Example: Probability that a vehicle be involved in an accident is determined by the no. of vehicles that involved in accidents the previous years
Non- Insurable risk:
Non-Insurable risk in which, the insurer is not able to calculates and estimates the future loss. It covers loss and gain. Example: life insurance, motor insurance. In Non-Insurable risk, the insurer cannot forecast and measure the risks.
Example: Probability that the commodity may not be sold the following year because of consumers’ change of taste cannot be determined because no previous statistics are available