Conditions that an insurable risk should have

The risk must be pure; the loss can be measured in currency; the occurrence of risk is accidental; the occurrence of risk must be Unexpected; the occurrence and occurrence of unintentional actions are unpredictable; the risk must be that a large number of targets have the possibility of suffering losses; the risk should have the possibility of causing significant losses

What is an insurable risk? What are the conditions?

Insurable risks refer to specific risks that meet the conditions for underwriting by the insurer. Although insurance is a way for people to deal with risks and provides them with financial compensation when they suffer losses, not all risks that destroy material wealth or threaten personal safety are covered by insurers.

The conditions for the implementation of the equilibrium theory of risk periods in China are not yet mature at this stage. Insurance companies should be careful to use weakened insurability conditions to underwrite risks to avoid inadequacy in insurance operations. Stablize. Each insurance company can take into account the laws and regulations on insurance macro supervision on the basis of risk portfolio.

An insurable risk is a risk that an insurer can insure. That is, risks that meet the insurance conditions of the insurer are a form of risk. Insurable risks must meet the following conditions:

1. Insurable risks are pure risks;

2. The occurrence of risks must be accidental;

3. Risks The occurrence is unexpected;

4. The risk must be that a large number of targets have the possibility of loss;

5. The risk loss must be measurable in currency.

(2) What conditions must be met to constitute an insurable risk? Further reading:

Relationship with insurance

Risk is the prerequisite for the occurrence and existence of insurance

Without risk, there is no insurance. The process of insurance creation and development shows that insurance is generated and developed based on the existence of risks and the need to compensate for losses caused by the occurrence of risks.

The development of risks is the objective basis for the development of insurance and the basis for the emergence of new types of insurance

With the progress of society and the improvement of scientific and technological levels, new and more risks are being brought to people. While increasing wealth, it also brings new risks and losses to people. In line with this, new types of insurance are constantly being produced.

Conditions for insurable risk

This requires that the variance of the loss value cannot be too large. Catastrophic risks such as wars, earthquakes, and floods have a very small probability of occurrence, and the expected loss calculated from this will be very different from the actual loss caused once the risk occurs. Moreover, the insured subject matter will inevitably be damaged at the same time, and the function of insurance to allocate losses will also be lost. Such risks are generally classified as uninsurable risks.

The distinction between insurable and uninsurable risks is not absolute. For example, catastrophic risks such as earthquakes and floods. When insurance technology is backward, insurance companies have insufficient financial resources, and the reinsurance market is small, insurance companies are simply unable to cover such risks. Once its potential losses occur, it may bring destruction to the insurance company. Sexual blow. However, as insurance companies become increasingly capitalized, new insurance technologies continue to emerge, and the reinsurance market expands, such risks that were originally uninsurable have been included in the scope of insurance liability by some insurance companies. It is believed that with the continuous development of the insurance industry and insurance market, the scope of protection provided by insurance will become larger and larger.

What are the conditions for car insurability

1. The degree of loss is high

2. The probability of loss is small

3 .Loss has a certain probability distribution

4. There are a large number of insurance subjects with homogeneous risks

5. The occurrence of loss must be unexpected

6. Losses can be identified and measured.

7. Losses cannot occur simultaneously

Conditions for insurable risks

1

Insurable risks

Insurable risks are limited to pure risks. The so-called "pure risk" refers to the uncertainty of only the possibility of loss but no opportunity for profit. Of course, not all pure risks are insurable risks. For a pure risk to become an insurable risk, the following conditions must be met:

(1) The degree of loss is relatively high

Once a risk event with a small potential loss occurs, the consequences are completely within people's tolerance Therefore, there is no need to use items to deal with such risks, and even if they are lost or accidentally damaged, it will not cause excessive economic difficulties and inconvenience to people. However, for those risk events with high potential losses, such as fires, thefts, etc., once they occur, they will cause great economic difficulties to people. For such risk events, insurance becomes an effective risk management tool.

(2) The probability of loss is small

Insurable risk also requires that the probability of loss is small. This is because the high probability of a loss means that the pure premium will be correspondingly high, and with additional premiums added, the total premium will be about the same as the potential loss.

For example, if the bicycle theft rate in a certain area is very high and 40% of new bicycles will be stolen, that is, each new bicycle has a 40% probability of being stolen. If the additional business rate is 0.1, it means that the total insurance premium will reach the new vehicle replacement rate. Half the price. Obviously, such high premiums are unaffordable for policyholders, and insurance has lost its significance in transferring risks.

(3) Losses have a definite probability distribution

Having a loss with a definite probability distribution is the primary prerequisite for premium calculation. When calculating premiums, the insurer must be able to make correct judgments on the objective distribution of losses. The risk accident rate used by the insurance company in its operations is only an approximate estimate of the true probability and is derived from empirical data statistics and calculations. Therefore, the correct selection of empirical data is crucial for insurers to determine premiums. Some statistical probabilities, such as population mortality, have a certain "timeliness". For empirical data like this, insurers must constantly make corresponding adjustments.

(4) There are a large number of insurance subjects with homogeneous risks

The function of insurance is to transfer risks, share losses and provide economic compensation. Therefore, any type of insurance inevitably requires the existence of a large number of insurance subjects. In this way, on the one hand, sufficient insurance funds can be accumulated so that the insured unit can obtain full protection; on the other hand, according to the "law of large numbers", the number of risk occurrences and loss values ??can have smaller fluctuations around the expected values. scope. In other words, a large number of homogeneous insurance subjects will ensure that the number of risk occurrences and loss values ??are concentrated within a smaller fluctuation range with a higher probability. Obviously, the smaller the deviation from the predicted value, the more conducive it is to the stable operation of the insurance company. There is no absolute numerical requirement for the "large amount" referred to here, and it varies with different types of insurance. The general rule is: the greater the variance of the loss probability distribution, the more insurance targets are required. In order to ensure the safety of their own operations, insurers often use reinsurance to spread risks among insurers. In this way, the concentrated huge risks can be dispersed across the country and even internationally, and the degree of protection for the insured and the safety of the insurance company's operations are improved.

(5) The occurrence of loss must be accidental

The occurrence of loss must be accidental and unintentional. The so-called "accident" means that the occurrence of risks is beyond the control of the policy holder and has nothing to do with any behavior of the policy holder. If the loss caused by the intentional behavior of the policy holder can also be compensated, it will cause a substantial increase in moral hazard factors and violate the original intention of insurance. In addition, requiring the occurrence of losses to be accidental (or called randomness) is also a prerequisite for the application of the "Law of Large Numbers".

(6) The loss can be determined and measured

The loss can be determined and measured, which means that the cause, time and place of the loss can be determined and the amount of the loss can be determined Determination. Because the insurance liability, insurance period, etc. are clearly stipulated in the insurance contract, the insurer is responsible for compensation only for losses that occur within the insurance period and are within the scope of the insurance liability, and the amount of compensation is limited to the actual amount of loss, so , the certainty and measurability of losses are particularly important.

(7) Losses cannot occur at the same time

This requires that the variance of the loss value cannot be too large. Catastrophic risks such as wars, earthquakes, and floods have a very small probability of occurrence, and the expected loss calculated from this will be very different from the actual loss caused once the risk occurs. Moreover, the insured subject matter will inevitably be damaged at the same time, and the function of insurance to allocate losses will also be lost. Such risks are generally classified as uninsurable risks.

2

Uninsurable risks

The risks that insurance companies can insure are insurable risks, and the remaining risks are uninsurable risks, dynamic risks, and speculation. Risks, etc. are all uninsurable risks. It is generally believed that the following matters are uninsurable risks:

(1) In personal insurance:

(1) Accidental injuries suffered by the insured in criminal activities;

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(2) Accidental injuries suffered by the insured in a fight;

(3) Accidental injuries suffered by the insured after being drunk, taking or injecting drugs;

(2) Property insurance:

(1) War, hostilities, military operations, armed conflicts, terrorism, riots;

(2) Insured Caused by intentional acts or connivance of people and their representatives;

(3) Nuclear reactions, nuclear radiation and radioactive pollution;

(4) Earthquakes, heavy rains, floods, typhoons, storms, Tornadoes, snowstorms, hailstorms, ice and mud, rockslides, cliff collapses, landslides, burst pipes, robbery, and theft;

(5) Defects, mildew, dampness, Insect bites. Losses caused by natural wear and tear, loss, spontaneous combustion, and melting;

(6) Various indirect losses caused by insured property suffering from insured risks;

(7) Due to administrative or law enforcement Losses caused by actions;

(8) Losses not covered by insurance liability.

3

Transformation of insurable risks and uninsurable risks

The difference between insurable risks and uninsurable risks is not absolute.

As the insurance industry develops, the scope of insurable risks continues to expand.

For catastrophic risks such as earthquakes and floods, when insurance technology is backward, insurance companies have insufficient financial resources, and the reinsurance market is small, insurance companies are simply unable to underwrite such risks. Once their potential losses occur, they will This could cause a devastating blow to insurance companies. However, as insurance companies become increasingly capitalized, new insurance technologies continue to emerge, and the reinsurance market expands, such risks that were originally uninsurable have been included in the scope of insurance liability by some insurance companies.

Currently, many insurance companies are actively applying financial innovation to transform uninsurable risks. For example, through the use of big data technology, insurance companies can collect a large amount of information about customers and their risk profiles to better conduct risk assessment and segmentation, and provide insurance for some risks that were previously uninsurable.

It is not difficult to find that insurance companies can improve insurability through financial innovation, and insurable risks and uninsurable risks can also be transformed accordingly. It can be seen that with the continuous development of the insurance industry and insurance market, the scope of protection provided by insurance will become larger and larger.

What is an insurable risk? What conditions are required to become an insurable risk?

It is a risk that the insurer can insure, that is, a risk that meets the insurer's underwriting conditions: Conditions: Insurable risk It is a pure risk; the occurrence of the risk must be accidental; the occurrence of the risk must be unexpected; the risk must be that a large number of targets have the possibility of suffering losses; and the loss of the risk must be monetary measurable.

Necessary conditions for insurable interest

According to British law, the insured should in fact have a relationship with the subject matter of the insurance that generates economic interest, and this relationship should It is a "legal or equitable relationship." It can be seen that there are two elements that must be met to constitute an insurable interest. According to Article 12, Paragraph 3 of the Chinese Insurance Law, insurable interests must also meet the following two requirements. 1. Insurable interest should be an economic interest

Insurable interest should be an economically insurable interest, that is, it is an economic interest. To obtain an insurable interest, the insured must have a reasonable expectation of benefiting from the safety or anticipated arrival of the insured property, or of being disadvantaged by its loss or detention. If the subject matter insured is not in fact exposed to such risk, or will not be exposed to such risk at the inception of the insurance, there is no economic interest and therefore no insurable interest.

As economic benefit, insurable interest must be measurable in money. Non-economic losses suffered by the insured, such as the insured's emotional attachment to the subject matter of the insurance or the mental trauma, political attacks, administrative or criminal penalties suffered by the insured, etc., although they have an interest in the insured, cannot constitute insurable losses. Benefit. Property that cannot be valued in monetary terms, such as priceless treasures, is difficult for insurers to insure and cannot be used as insurable interest.

Insurable interest must be predictable or determinable. That is to say, when the insurance contract is concluded, the insurance risk may occur and may affect the insured. Of course, this possibility is not so remote as to be illusory. The so-called possibility means that the insured accident may occur, and the occurrence of the insured accident may lead to the loss of insured property. Here, the expectation of loss should be reasonable. At the same time, the degree of likelihood should be high. However, the insured does not need to prove that he would have made a profit if the insured event had not occurred. In other words, the insured's interest in the subject matter of insurance can only constitute an insurable interest if it has been determined or can be determined. An established interest is an existing interest (such as owned or occupied property). The stakes that can be determined are expected interests (such as profits from the sale of goods, expected interests in speculative activities such as stock or futures trading, freight income, rental income, responsibilities to others, etc.).

2. Insurable interests should be legal or equitable interests

Insurable interests should be legally insurable interests, that is, legal or equitable interests. In the Lucenav. Craufurd case, the House of Lords held that mere factual expectation of future property interests is not sufficient to constitute an insurable interest. In order for a loss or gain to be sufficiently certain, the economic benefit must be combined with something else. The insurable interest must be a strictly legal right or a right arising under a contract. It can be seen that only specific economic interests recognized by law can become insurable interests. Article 5(2) of MIA1906 reflects this technical approach to identifying insurable interests. In other words, insurable interests must comply with the requirements of public order, not violate the prohibitive provisions of the law, and comply with the mandatory provisions of the law. Otherwise, even if the insured has an interest in the insured property, for example, a possessory interest in smuggled goods or goods imported without import rights, there is still no insurable interest.