XYZ Insurance Company writes coverage for most perils which can damage property.XYZ,however,does not write flood insurance on property located in flood plains.Which requirement of an ideally insurable risk might be violated if XYZ wrote flood insurance on property located in flood plains?
A)There must be a large number of similar exposure units.
B)The loss should not be catastrophic.
C)The chance of loss must be calculable.
D)The losses must be determinable and measurable.

Question

Quizplus · Accepted Answer

The loss from flooding in flood plains can be catastrophic due to the high likelihood of many properties being affected simultaneously, making it challenging for insurance companies to spread the risk.

XYZ Insurance Company Writes Coverage for Most Perils Which Can