What characterizes a risk that can be insured?

A risk that can be insured is characterized primarily by the ability to predict losses. Insurers rely on statistical data and historical trends to evaluate the likelihood and potential cost of a loss occurring. The predictability of losses allows insurance companies to set premiums accurately and manage their overall risk exposure.

For a risk to be insurable, it must also have defined parameters such as frequency and severity, which enable insurers to establish policies that adequately cover the potential losses. Predictable risks allow insurers to calculate the necessary reserves and create a viable business model, thus making insurance feasible.

Randomness of the risk is a factor, but it does not alone define insurability. The insured's knowledge of the risk and the approval from agents play secondary roles in the process of underwriting and policy issuance, but they do not inherently characterize the insurability of a risk. The main feature that ensures a risk can be insured is the actuarial ability to foresee and quantify potential losses.