Question

Discuss the risk of Coronavirus to corporations. Is it an Insurable Risk ?Use the 6 characteristics of an ideally insurance risk to explain your answer.

1. Large number of exposure units
2. Accidental and unintentional loss
3. Determine and measurable loss
4. No catastrophic loss
5. Calculable chance of loss
6. Economically feasible premium

Answer 1

The infection arising out of Corona Virus is an insurable risk. On the basis of the six characteristics of the insurable risk this is spread on large scale. The number of people who have been affected by this is quite large. The people those who were infected with this did not do it intentionally as the virus spreads through the people when they are communicating with each other or are close to each other. The amount of loss that can arise due to this is measure able similar to any other disease like cancer or tuberculosis and they both are insured. This is not catastrophic like hurricanes or floods or earthquake. The probability of a loss can be determined if an individual is taking precaution. Since this is spread on large scale the premium can be determined in such a way that it can be afforded by one person and premium is not such large that it becomes impossible to purchase it.