Not all risks are insurable. Insurance depends upon the calculation of probabilities. The probability that an event will occur is estimated by the underwriter. In Life Assurance statisticians called actuaries are experts in the statistical analysis of probabilities in the mortality, sickness and retirement fields. Statistical records over a very long period enable them to calculate the chances of any particular applicant, say a bus driver, suffering from a disability, or dying before the policy matures. The premium is then fixed at such a figure that the insurance company will be able to meet the obligations it has assumed.
Some risks are not susceptible to insurance, because there are no records on which to make calculations. I cannot insure against the risk that I shall prove to be a fool in business, for there are no records of my success or failure to help the actuaries.
All the questions in the proposal form shown below affect the calculations of the probability of someone being hurt. For instance in Question 3:
(a) The date of the event. Some days are busier than others. A public entertainment on Tuesday will not attract many people, for they will be at work. A public entertainment on Saturday and Sunday will attract a large crowd, with consequently greater chances that someone will be hurt.
(b) Number of days involved. If it goes on for only one day the risks will be smaller than of it to run over a complete week.
(c) Full particulars of the event. If it is a ‘Dogs Show‘ the risks will be less than if it is a sports-car meeting or an air-display. The actuaries need to know what type of event is being staged before they can fix the premium.
(d) The anticipated attendance. It will make a great deal of difference to the chances of someone being hurt if the attendance is large. Not only will the numbers available to be hurt be greater, but the chances of collisions will be greater too. This applies especially in car parks, or on terraced stands.
Under the heading of insurable risks come such risks as fire, burglary, storm and tempest, marine disasters, and motor vehicle and aviation accidents. Non-insurable risks include such item as the chances that the goods a businessman has bought will cease to be fashionable before he has sold them, or the chances that a slump will develop so that his business proves unprofitable.
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