ECONOMICS
INSURANCE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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All risks can be insured
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It is an economic institution
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It is based on the principle of mutuality
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It is an accumulation of funds to pay claims resulting from a specific risks
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Detailed explanation-1: -It is a form of risk management primarily hedged against any uncertain future loss. The functions of insurance are risk sharing, assisting in capital formation, economic progress, etc. Lending of funds is not a function of insurance.
Detailed explanation-2: -Which of the following is not an element of insurable risks? Loss must be predictable.
Detailed explanation-3: -The essential features of insurance are: It is based on the principle of mutuality or co-operation. Its objective is to accumulate funds to pay for claims that arise as a result of the operation of specific risks.
Detailed explanation-4: -In case of a scenario where the loss is too huge that no insurer would want to pay for it, the risk is said to be uninsurable. A risk may not be termed as insurable if it is immeasurable, very large, certain or not definable.