Which of the following is not a of insurance?Risk sharingAssist in capital formationLending of fundsNone of the above (2024)

FAQs

Which of the following is not a of insurance?Risk sharingAssist in capital formationLending of fundsNone of the above? ›

Lending of funds is not a function of insurance.

(c) Lending of funds.

Two types of risk cannot be insured: natural occurrences and human error.

4) The insurance premium paid, are invested by the insurer in various income generating assets which assists in capital formation.

The two most common risk sharing examples are insurance policies and indemnification clauses in contracts. Insurance policies are the most common risk sharing strategy. A company or individual will purchase an insurance policy from the insurance company that ensures coverage of unexpected loss.

Risk Avoidance–eliminate the exposure completely. Risk Control–reduce chance or size of loss, or make the likelihood more certain. Risk Transfer–via insurance or contractual language. Risk Retention–decide to bear the risk at an acceptable level.

Risk sharing, a fundamental concept in insurance and risk management, refers to the practice of distributing or transferring the financial impact of potential losses among various parties.

An uninsurable risk could include a situation in which insurance is against the law, such as coverage for criminal penalties. An uninsurable risk can be an event that's too likely to occur, such as a hurricane or flood, in an area where those disasters are frequent.

Speculative risk is not considered an element of an insurable risk. Pure risks (which only have possibilities of loss or no loss) are typically what insurance companies cover.

Some of the most common non-insurable risks include natural disasters, pandemics, and acts of terrorism. While business Insurance can help protect businesses from many types of risks, it is important to be aware of the risks that are not covered.

What is included in capital formation? ›

Capital is the most important factor of production particularly in a developing economy. Capital Formation is defined as that part of country's current output and imports which is not consumed or exported during the accounting period, but is set aside as an addition to its stock of capital goods.

Thus, for capital formation, both savings and investments are necessary.

Risk capital is the capital required to finance the consequences of business risks.

The insurance option that would be considered a risk-sharing arrangement is the Mutual option. A mutual insurance company is owned by its policyholders, who share in the profits and losses of the company. Policyholders contribute premiums to the company, and in return, the company provides coverage and pays claims.

Most pure risks can be divided into three categories: personal risks that affect the income-earning power of the insured person, property risks, and liability risks that cover losses resulting from social interactions. Not all pure risks are covered by private insurers.

Risk transfer is most often accomplished through an insurance policy.

The Risk Sharing Framework creates an opportunity to better serve affected people, by improving management of risk within delivery chains through a principled approach to sharing the burden of preventative measures and responsibility for materialising risks.

Definition of 'risk' in insurance is the "uncertainty of the occurrence of an event that can cause economic losses". What are the forms that risk? Other forms of risk among other pure risk, speculative risk, the particular risk and fundamental risk.

Final answer: Insurance regulation aims to supervise insurance rates, promote availability, and prevent price-fixing, but it does not prohibit insurance-rating, a necessary process of determining premiums based on risk.

Protection is a function of insurance. Is to provide protection from probable chances of loss. Insurance cannot stop the happening of risk or any unforeseen event but can compensate for losses arising out of it.