[I075]

insurable risk
Any subject matter eligible for insurance. While the law does not specify minimum criteria (except occasionally by regulation that the size of any risk insured and the amount of premium writings by an insurer be related to its financial strength), and textbook writers disagree on essential criteria, the following are probably desirable:

1) Enough relatively similar exposure units should be insured to permit the operation of the Law of Large Numbers (unless reinsurance is used by the insurer)

2) Losses insured should be measurable and accidental to the insured (to prevent intentional losses)

3) Risks taken should not threaten the insurer with a catastrophe (unless reinsurance is used) because of their centralized location or other condition.