Question

Provide TWO examples of PURE risks for which:

a) commercial insurance cover is usually available and explain WHY it is usually available

b) commercial insurance is NOT usually available and explain WHY it is not usually available

c) commercial insurance is ‘available sometimes but not at other times’ and explain how the availability (or not) of commercial insurance is influenced by ‘the underwriting cycle’.

Answer 1

Solution A

In this case when insurance is available this can lead to liability risk and property risk. It is generally available because of regulation and mandatory insurance cover to mitigate risks and sudden losses.

Solution B

Commercial insurance when not available can lead to risk of prrmature death and risk of unemployment. Sometimes commercial insurance is not always available because lack of demand and seriousness as well as low returns on such insurance policies.

Solution C

If insurance is available at sometimes it can kead to combination of personal risks like prrmature death and also property risks.

Moreover availability of insurance is largely dependent upon underwriting cycle because of supply and demand in insurance markets and to mitigate excessive loss by insuring firm in case of natural disaster or accidents or property risks which is beyond one's control.