Insurable vs Non-Insurable Risks
Risks that can be calculated are insurable, e.g. death, fire, motor accidents, theft, or embezzlement. Risks that cannot be calculated are non-insurable, e.g. a fall in demand for a product, a bad harvest, or losses from gambling.
| Insurable Risks | Non-Insurable Risks |
|---|---|
| Have past statistical records | No past records |
| Premium can be calculated | Premium can’t be calculated |
| Occurrence is predictable | Occurrence isn’t predictable |
| Insurers are willing to accept the risk | Insurers are unwilling to accept the risk |
| Examples: fire, theft, accidents | Examples: gambling, fund mismanagement |
Insurance vs Gambling
Insurance doesn’t aim to make a profit, while gambling does. In insurance, the unlucky person (who suffers a loss) is compensated; in gambling, the lucky person collects the winnings and the unlucky one gets nothing. Insurance premiums are calculated scientifically, while gambling stakes are not.
