In some cases, an individual may be considered as such a poor risk that a company may consider it an unwise business practice to ensure him at all.
The various life risks cannot be treated individually, so they are put under a few broad categories based on the degree of each risk. There are two main classes of risk: If the insurance can be purchased at higher premium, there should not be any uninsurable risk.
Theoretically, after investigating all the factors affecting a risk, the life insurance company should be able to give each due consideration and determining the premium charge for the insurance.
Practically, however, there are a number of reasons why some persons are not insurable. The premium would be much high for these persons which will be against the insurance principle because higher premium will stimulate only to those who are at death bed.
If they are allowed it would be a case of speculation because after payment of a few premiums he will be gaining. It would be unfair to other healthy policyholders.
The second reason is that unknown risk cannot be insured to avoid the existing policyholders. So, in order to protect existing policy-holders, the insurance company must accept those risks against which it can assess adequate and fair premiums to provide for claims.
There is a standard of risk, if the risk is not too great i. The risk of death among sub-standard lives varies, but in all cases it is higher than that of standard lives. Insurable risks are divided into three broad classes standard, sub-standard and super-standard.
Every insurer, however, does not use all these classifications.
Generally distinction between standard and super-standard is not made. The standard risk is related with the normal life where there is no much or no less risk.
There is certain criteria on which the risks are judged as normal life. It does not refer to ideal or first class life but it is rather a mix of good and bad lives. This group does not contain only those persons who are free from all impairments or those persons who are under serious illness.
It is the group where majority of the persons can be included and who may be either more or less than the average. Sub-standard risks are those risks which are higher though insurable than the standard risk.
Thus, the sub-standard risks are above the standard risk and below the uninsurable risk. If the life proposed crosses the maximum limit of sub-standard risk that will be treated as uninsurable.
The sub-standard risk is insured after payment of additional premium. The super-standard risk is present where there is lesser risk than the standard risk. This is also called a preferred risk.
An insurer does not prefer to issue preferred risk policies because it increases the premium on other standard risk which may cause reduction in loss of business.uninsurable risk. Definition Condition or situation that fails to meet the requirements of an insurable risk, such as where a loss is inevitable (as the death of a patient suffering from a terminal illness) or where the damage is gradual (as corrosion or rusting of metals).
Risk Management Page 3 of 8 Insuring against civil liability that may occur in the carrying out of the mission of the system. System Risk Management is responsible for assessing the various insurable risks which.
is to examine the allocation of insurable risks in commercial leases in two situations. Part I deals with allocation of risks as between the landlord and the tenant, including the risk of loss of the property owned by each party.
Part I proposes a new approach under which the risks are placed, to a. Characteristics of insurable risks.
“A 20 year owner of a property slipped after getting out of his pool, due to a damaged block, and filed a claim with his insurance company because he believed it . “ A 20 year owner of a property slipped after getting out of his pool, due to a damaged block, and filed a claim with his insurance company because he believed it was an insurable risk. ” Was this Helpful? YES NO 4 people found this helpful. The risks can be forecast and measured e.g. motor insurance, marine insurance, life insurance etc. This type of risk is the one in which the chance of occurrence can be deduced, from the available information on the frequency of similar past occurrence.
Risk which can be insured by private companies typically share seven common characteristics. Large number of similar exposure units. What is 'Uninsurable Risk' Uninsurable risk is a condition that poses unknowable or unacceptable risk of loss or a situation in which the insurance would be against the law.
Insurable risks Many risks can be insured by microinsurance, although as with traditional insurance, some of them are more complex and therefore more difficult and expensive to cover than others.
Microinsurance, as other types of insurance, should only cover insurable risks.