WAEC Commerce 2001 Theory question 109

(a) Uninsurable risks are risks whose probability cannot be calculated from past experience, so no premium can be fixed for them, and they are not accepted by insurers. Examples (any two): loss from changes in fashion or taste; loss from bad management; competition; changes in government policy; gambling/speculation losses; trade depression.
(b)(i) Hull insurance – marine insurance covering the ship itself and its machinery against perils of the sea.
(ii) Fidelity guarantee – insures an employer against loss from fraud or dishonesty of employees handling money.
(iii) Underwriter – the person or insurer who accepts the risk (signs under the policy) in return for a premium.
(iv) Premium – the amount paid by the insured to the insurer for cover, based on the degree of risk.

Uninsurable risks cannot be calculated statistically.