Which type of risk is insurable?

Pure risk is considered insurable because it involves situations that present a possibility of loss or no loss, but not a chance of gain. This type of risk typically covers events that can be predicted and are generally negative in nature, such as natural disasters, accidents, theft, or illness. Insurance companies are equipped to underwrite pure risks because they can calculate the likelihood of these events occurring and set premiums accordingly.

In contrast, speculative risk involves opportunities for both gain and loss, making it uninsurable. For example, investing in stocks presents both the potential for profit and the possibility of loss, which does not fit within the insurable risk framework. Market risk and financial risk are also related to potential changes in economic conditions or financial markets, which are typically beyond the control of individuals and again do not fit the criteria for insurability in the traditional sense.