General Insurance
Why do insurers treat losses from flooding along a single river valley as difficult to write as an insurable risk?
Answer and explanation
Answer: B. Insurable risk requires that losses be spread rather than concentrated, since one flood can hit the whole pool and defeat the pooling that makes the premium work. Measurability, insurable interest and the absence of intent are satisfied in this case.Source: PSI — New York DFS Insurance Candidate Information Bulletin — Outline, elements of insurable risks
More general insurance questions
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