Phabbyfundz
Active member
From an insurance view point , terrorism risks is very different from the kind of risks typically insured. To be readily insurable, risks have to have certain characteristics.
The risks must be measurable. Insurers must be able to determine the possible or probable number of events (frequency) likely to result in claims and the maximum size or cost (severity) of these events. For example insurer know from experience about how many car crashes to be expected per 100,000 mile driven from any geographical area and what these crashes are likely to cost. As a result they can charge a premium equal to the risk they are assuming in issuing an auto insurance policy.
A large number of people or businesses must be exposed to the risk of loss but only a few must actually experience one.
The risks must be measurable. Insurers must be able to determine the possible or probable number of events (frequency) likely to result in claims and the maximum size or cost (severity) of these events. For example insurer know from experience about how many car crashes to be expected per 100,000 mile driven from any geographical area and what these crashes are likely to cost. As a result they can charge a premium equal to the risk they are assuming in issuing an auto insurance policy.
A large number of people or businesses must be exposed to the risk of loss but only a few must actually experience one.