From the viewpoint of an insurer, the prerequisites of an ideally insurable risk include all the following except: A) the loss must be capable of being determined and measured B) there must be a large, homogeneous group of exposure units C) the loss should not be subject to catastrophic hazard D) the peril should be such that the probability of loss is high

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Quizplus · Accepted Answer

The prerequisite that is not included in an ideally insurable risk is that the peril should be such that the probability of loss is high. In fact, an ideally insurable risk would have a low probability of loss but a high severity of loss, meaning that the potential loss amount is significant but the likelihood of it actually occurring is low. This allows for the insurer to collect premiums from the large, homogeneous group of exposure units with minimal payouts.

From the Viewpoint of an Insurer, the Prerequisites of an Ideally