What does insurable risk not cover?

Insurable risks typically focus on events that are unpredictable and can impact individuals or businesses specifically. Catastrophic events affecting many people, such as natural disasters or widespread pandemics, often fall outside the scope of insurable risks due to the sheer scale and potential for massive losses that can overwhelm the insurance system. Insurers may struggle to cover losses for such widespread events because they can lead to losses that exceed their capacity to pay claims, disrupt the insurance market, or result in reduced availability of coverage.

In contrast, predictable losses, accidental losses, and measurable losses are aligned with the principles of insurability. These types of risks tend to be more manageable and are easier for insurers to assess, price, and cover. Insurers can quantify these risks based on historical data and statistics, making them suitable for traditional coverage. Therefore, catastrophic events impacting a large number of people represent a critical distinction in what is insurable, making the choice that includes these events the correct answer.