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

An insurable risk is typically characterized by certain key elements, and understanding these characteristics helps identify which aspects align with insurability.

An insurable risk must be able to be quantified in financial terms, meaning that the potential financial loss can be measured or estimated, providing a basis for determining premiums and payouts. Furthermore, insurable risks are generally accidental rather than intentional; they involve events that are beyond the control of the insured, ensuring that they are genuinely risk-based events rather than deliberate acts. Additionally, the potential loss associated with an insurable risk should be predictable to a degree, allowing insurers to assess the likelihood and financial implications of these events when determining insurance products.

In contrast, the subjectivity of risk, where it varies significantly from one person to another, does not fit the criteria for insurability. Insurers seek risks that can be standardized and averaged across a pool of policyholders to establish sustainable pricing and coverage options. Subjective risks do not lend themselves well to this standardization and can lead to disproportionate outcomes for both insurers and policyholders. Thus, the assertion that the risk is subjective and varies from person to person does not align with the fundamental characteristics that define an insurable risk.