Insurable vs. Uninsurable Risks

                                                         Not every negative economic event is insurable. For risk pooling to be effective, the risk should be unforeseen and infrequent. If a negative event can be predicted in a certain case, it's not a risk, but certainty -- and certainties are not insurable (with the possible exception of death, which is insurable because its timing is uncertain). Furthermore, if a risk is too frequent, it cannot meaningfully be transferred to an insurance company, since the insurance company would only pass on the cost of the negative occurrence to the pool of insureds, along with their expenses and profits. If nearly everyone in a risk pool is filing a claim, then they are likely better off not attempting to pool their risks at all but setting aside sufficient reserves to pay for them themselves.