Why the insurers of the NZ International Convention Centre that recently caught fire should be ‘happy’ about the claim
Insurance as a product transfers the risk of loss from the insured to the insurer. However, insurance as a business is about much more than that; it is primarily about balancing a key ratio. It must be, otherwise for the reasons set out below the business would no longer exist.
The balancing act
The risks that insurers take on must be risks that consumers and businesses feel a real exposure to. If the chance of a loss resulting from an insured risk is too remote, no one will want to pay money to transfer it. Every time a loss occurs as a result of an insured risk, the insurance product is validated. The need for it is reinforced. Sales are encouraged. [Read more…]