Define Pure risk,particular risk,fundamental risk,financial

by Guest » Fri Nov 13, 2009 11:14 am
Guest

Define Pure risk,particular risk,fundamental risk,financial value

Total Comments: 7

Posted: Fri Nov 13, 2009 09:03 pm Post Subject:

Be happy to.

Pure Risk: This is the only type of insurable risk. It involves elements of either loss or no loss and prevents the policyholder from insuring a "speculative risk" which involves elements of loss and/or profit. You cannot insure a speculative risk as one cannot profit due to an insurance loss.

Particular Risk: This is the type of risk that affects few individuals or what are known as "capital units" within a specific distance or geography. The thought is that the insured can control the loss activity on these risks due to their ability to control the circumstances surrounding the exposure.

Fundamental Risk: This is risk which affects large numbers of people or large amounts of capital units. These are risks that are not within the insured's control, such as earthquakes, hurricanes, interest rates, economic downturns/upturns, etc. Most insurance deals with fundamental risk.

Financial Value: This can be looked at as either the financial value of an insured item, such as a house, or a person's life, such as in life or health insurance. It may or may not be considered the actual financial value of the exposure insured. A car has a financial value that can usually be easily determined; not so much with life and health areas.

Does this help? Hope so!

InsTeacher 8)

Posted: Wed Jun 08, 2011 07:22 am Post Subject: insurance and risk management

what is insurance and risk amnagement

Posted: Wed Jun 08, 2011 11:02 pm Post Subject:

Risk management is what a person does to mitigate the financial consequence of a loss. The five most common methods associated with insurable risk are:

Self-insure (risk retention, being uninsured)
Transfer (buy insurance)
Avoidance (complete non-exposure to a loss, difficult at best)
Reduce (eliminate some of the risk)
Share (deductibles, co-pays)

Posted: Wed Nov 09, 2011 05:23 pm Post Subject: meaning of risk in insurance

meaning of risk in insurance and risk classification

Posted: Thu Nov 10, 2011 06:29 am Post Subject:

Risk in insurance terms refers; to the possibility of a loss or an event for which an acceptable loss may be calculated, and which an insurance company is willing to cover.

In other words, the calculation of how prone you are of filing a possible claim and thus, a considerable risk to the profit of the insurance company.

Insurance companies have different underwriting guidelines that determine what risk class an individual falls under. The insurer (in case of Life insurance for example) will look at your personal medical history, smoker status, BMI, medical exam reports, your family medical history, hazardous hobbies, credit score, etc, to calculate the risk factor.

There are 4 risk classes that determine the premiums to be paid to the insurance company. The higher the risk class, higher will be the premium.

The risk classes are:

Standard: This class represents people with average risk factor. The premiums for the standard class are the base premiums.

Substandard: This class represents people with higher risk than the average or standard class. A person may fall in this category due some medical problems, smoker status or credit score. Premium costs will be higher for this category, than a person who is under standard class.

Preferred: Represents people with lower risk factors than the average. A person may fall under this class for his lifestyle or health status. Premiums for this category are less than the standard class, because this class is least probable of making a claim and hence, more profitable for the insurance company.

Declined: Some people represent too great a risk for the insurance company to insure. A person who is almost certain of claiming is mostly declined by an insurance company.

Posted: Thu Jul 17, 2014 02:45 pm Post Subject: Insurance

Which fundamental risk is insurable?

Posted: Fri Jul 18, 2014 06:07 am Post Subject:

Is this a test? Or is this your assignment for a college class and you're too lazy to find out on your own? Any risk that is not "speculative" is insurable. Whether there is an insurance company willing to underwrite the risk is another story.

Add your comment

Image CAPTCHA
Enter the characters shown in the image.