Hi everyone, I realise that the school fundraiser satisfies a good number of the requirements for a risk to be insurable. But this is still a gamble (I think) and will not be insurable in reality. But the answer says some insurers write such. Is this true? And examples please. Also, I don't see how there is an element of moral hazard here since there is no precaution the school can take to prevent a win except of course they act fraudulently and load the dice.
Hi this is insurance as opposed to gambling because the insured (the school) has a financial interest in the risk being insured. If someone throws six sixes they will stand to lose £24,950. There are many potential examples of this in reality (eg many public competitions on the radio/tv might have insurance to protect them against a larger than expected payout). Moral hazard is fairly low here, but the insurer will want to be sure that the dice aren't loaded and that the winners did genuinely roll six sixes without any cheating etc.
Even in gambling e.g. at the casino, the casinos still lose money but that does not mean it is not gambling.
It is insurance here because the school has a financial interest in the risk being insured (win or lose). If the school tried to buy a policy that would pay out if a house 600 miles away was burnt down, that would probably not be insurance because the school is unlikely to have a financial interest in the house.
