Which factor helps to determine a risk's insurability?

The predictability of the loss is a fundamental factor in determining a risk's insurability because insurers need to analyze the likelihood of a loss occurring within a specified timeframe. If the potential losses can be accurately forecasted based on historical data, statistical analysis, and underwriting criteria, then the risk can be assessed more effectively. Predictability allows insurers to charge appropriate premiums and to set reserves for potential claims, which is critical for maintaining the financial viability of an insurance company.

Factors like randomness of the loss and past claims history contribute to the overall understanding of a risk, but it is the predictability that truly informs the underwriting process. Insurers primarily look for risks that can be managed and quantified, thereby making them more suitable for coverage within an insurance policy. The nature of the insured's activities can also influence insurability, but it is the predictability of losses associated with those activities that is most central to the underwriting decision.