Which of the following is NOT a characteristic of insurable risk?

Insurable risk possesses specific characteristics that allow for effective assessment and management by insurance providers. One of the essential attributes of insurable risk is that it should be quantifiable. This means that the potential financial losses must be able to be measured or estimated based on statistical analysis and historical data.

When a risk is unquantifiable, it becomes difficult for insurers to determine appropriate premiums or to predict the likelihood of a claim. This lack of measurement disrupts the fundamental principles of risk pooling and pricing, which are vital for a sustainable insurance model. Insurers thrive on data that allows them to predict outcomes and set rates that allow them to cover potential losses while remaining profitable.

In contrast, characteristics such as being non-catastrophic, homogeneous, and predictable are crucial for insurable risks. Non-catastrophic risks minimize the chance of large, unexpected financial burdens that could threaten an insurer's solvency. Homogeneous risks are those that share similar characteristics, which helps in assessing risk consistently across a population. Predictable risks allow insurers to estimate the likelihood of occurrences and calculate premiums accordingly.