Question

"Insurance does not remove risk, but it compensates for the loss resulting from the risk" Justify this statement.​

Answer 1

Explanation:

Insurance increases risk. An insured person doesn't care if he or she loses an insured item because he or she is insured against the loss of the item. However, insurance companies do their best not to compensate their customers. Therefore, typically, they do NOT compensate for the loss resulting from the risk.

Since insurance companies routinely deny genuine claims, the best way to get paid is via fraudulent claims. Insurance companies routinely pay against fraudulent claims. They know that the claims are fraudulent but are unable to prove it. Good customers, similarly, know that the insurance company is fraudulently denying their claims. But they are unable to prove it.

Good customers get insurance, in most cases, because it's a legal requirement. People who make fraudulent claims are often uninsured. Therefore, insurance companies reduce

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