Are all pure risks insurable by private nongovernmental insurers?
Personal Risks Personal risks are those risks that directly affect an individual. Personal risks detrimentally affect the income earning power of an individual.
They involve the likelihood of sudden and complete loss of income, or financial assets sharp increase in expenses or gradual reduction of income or financial assets and Insurable risks rise in expenses. Personal risks can be classified into four main types: Insurable risks, anybody who dies before attaining age 70 years could be regarded as having died prematurely.
Premature deaths usually bring great financial and economic insecurity to dependants.
In most cases, a family breadwinner who dies prematurely has children to educate, dependants to support, mortgage loan to pay. In addition, if the family bread-winner dies after a Insurable risks illness, then the medical cost may still be there to settle and of course the burial expenses must have to be met.
By the time all these costs are settled, the savings and financial assets of the family head may have been seriously depleted or possibly completely spent or sold off and still leaving a balance of debt to be settled.
The death of family head could render some families destitute and sometimes protracted illness could so much drain the financial resources of some families and impoverish them even before the death of the family breadwinner.
When a family breadwinner dies, the human-life value of the breadwinner would be lost forever. This loss is usually very considerable and creates grate financial and economic insecurity.
What is a human life value? A human life value is the present value of the share of the family in the earnings of the family head.
In retirement, one would not be able to earn as much as before and because of this, retired people could be faced with serious financial and economic insecurity unless they have build up sufficient savings or acquired sufficient financial assets during their active working lives from which they could start to draw in old age.
Even some of the workers who make sufficient savings for old age would still have to contend with corrosive effect of inflation on such savings. High rate of inflation can cause great financial and economic distress to retired people as it may reduce their real incomes.
It is only when people are healthy, that they can meaningfully engage themselves in any productive activity an earn full economic income. Poor health can bring serious financial and economic distress to an individual.
For example, without good health, nobody can gainfully engage himself in any serious economic undertaking an maximized his economic income. A sudden and unexpected illness or accident can result in high medical bills.
Therefore, poor health will result in loss of earned income and high medical expenses. And unless the person has adequate personal accident and health insurance cover or has made adequate financial arrangements for income from other sources to meet these expenses, the person will be financially unsecured.
The risk equally poses a great threat to all those who are still in school or undergoing courses of vocational training with the notion of taking up salaried job after the training period.
Self-employed persons, whose services or products are no longer in demand, could also be faced with the problem of unemployment.
Unemployment is a situation where a person who is willing to work and is looking for work to do cannot find work to do. Unemployment always brings financial insecurity to people. This financial insecurity could come in many ways, among which are: When this happens, he will suffer some financial hardship unless he has previously built up adequate savings on which he can now start to draw.
This would also bring financial insecurity. Speculative risks are very common in business undertakings. For example, if you establish a new business, you would make a profit if the business is successful and sustain loss if the business fails.
If you buy shares in a company you would make a gain if the price of the shares rises in the stock market, and you would sustain a loss if the price of the shares falls in the market. If the price of the shares remains unchanged, then, you would not make a profit or sustain a loss.
Gambling is a good example of speculative risk.
Gambling involves deliberate creation of risk in the expectation of making a gain. There is also the possibility of sustaining a loss. Most speculative risks one dynamic risk with the exception of gambling situations. Other examples of speculative risk include taking parts in a football pool, exporting to a new market, betting on horse race or motor race.
Speculative risks are no subject of insurance, and then are therefore not normally insurable.Business insurance is designed to protect your IT company against risk, or the likelihood of a loss.
But it’s important to understand that even the most comprehensive insurance policies don’t cover every type of risk, and don’t offer unlimited compensation in the event of a claim. insurable risks. • Measuring the response of insurance – Drawing upon Aon’s in depth knowledge of insurance to comprehensively review and clearly translate how your current insurance program responds to the risk profile developed.
losses incurred as a result of certain risks, contingencies or occurrences specified under the contract.t For such an agreement to be judicially en forceable, the insured must have an insurable .
Insurable risks are the type of risks in which the insurer makes provision for or insures against because it is possible to collect, calculate and estimate the likely future losses. Insurable risks have previous statistics which are used as a basis for estimating the premium.
Elements of Insurable Risk Though insurance may be one of the most effective ways to handle risks, not all risks are insurable. As noted earlier, insurers will insure only pure risks, or those that involve only the chance of loss with no chance of gain. Domestic Insurable Risks We recommend that you carefully consider the risks, perils or events below especially the ones which you are not insured against and what impact these would have on you should you choose to continue without insurance on them and carry the risk, peril or event yourself.