Licentiate Examination - IC 01 - Principles of Insurance Exam - Important Points
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Peril is an Event or Incident, that may cause a Loss. Examples of Perils can be, Fire, Flood, Earth-Quake, Lightning, Land-Slide, etc.
Insurance cannot prevent the Occurrence of the Peril or the Resultant Loss due to a Peril. Insurance only tries to reduce the Financial Loss to the Owner or Beneficiary of the Asset.
Risk is Un-Certainty of Outcome. If there is a Chance that the Outcome will be Different from Expectations, there is a Risk.
Risks can be classified as Catastrophic Risks and Important Risks, Financial Risks and Non-Financial Risks, Dynamic Risks and Static Risks, Pure Risks and Speculative Risks, Fundamental Risks and Particular Risks.
Catastrophic risks - Single event leads to higher than usual number/amount of claims on the insurer