Insurance Risk

Insurance risk refers to the uncertainty about whether a policyholder will experience a covered loss and the potential size of that loss. It involves the chance that an insured event, like an accident or damage, might happen and the financial impact it could have. Insurers assess these risks to set appropriate premiums; higher risks mean higher costs. Essentially, insurance risk is about predicting and managing the possibility and severity of future claims to ensure the insurer can fulfill its obligations without undue financial strain.