Prepared by: Asst. Lecturer Hamid Jasim Alwan An insurance risk is a possible and uncertain event that leads to a financial loss if it occurs. The risks faced by human beings share two fundamental characteristics: • Financial loss • The occurrence of the risk is not certain The risks to which individuals are exposed are divided into three main categories: Personal Risks: death, illness, unemployment, and old age. Property Risks: fire, theft, and loss. Civil Liability Risks: damage caused by a person to another individual for which they are legally liable, such as accidents involving cars, ships, and aircraft, or harm caused by doctors, engineers, and pharmacists in the course of their professional practice. Conditions that must be met for a risk to be insurable: • The risk must be probabilistic, meaning that its occurrence is neither impossible nor absolutely certain. • It must be possible to measure the probability of the risk occurring or to estimate the financial losses resulting from it for the insured. • The occurrence of the risk must not be intentional; that is, the insured must not deliberately cause it or commit intentional acts that lead to its realization. Otherwise, the risk loses its probabilistic nature, and insurance becomes a means of unlawful gain, such as in the case of suicide. • The risk must be widely distributed among a large number of insured individuals, meaning it should not be concentrated on a single person or a small group. At the same time, it should not be so widespread that its occurrence results in a catastrophe affecting the insurer, such as risks related to wars, earthquakes, floods, volcanoes, and revolutions. • The loss resulting from the occurrence of the risk must be material; therefore, insurance cannot be provided for items that have only emotional or sentimental value to their owners. • The occurrence of the risk must be easy to prove. For example, insurance cannot be provided against illnesses that have no clear symptoms, such as headaches or memory weakness. Likewise, insurance cannot be provided against the burning of certain types of property, such as cash kept by a person in their home. • The interest exposed to risk must not violate public order or the law. Therefore, insurance is not permissible against risks that would encourage negligence among citizens, such as insurance against traffic violations. Similarly, insurance is not allowed against risks that are contrary to public morals or involve smuggling.