R
RedCoat
Member
This question is a fairly standard one, with part (i) asking about conditions for a risk to be insurable and then (ii) giving two proposed insurance arrangements and asking for comments on whether they fit the criteria.
One of these is a school which is holding a game at a fundraising event. For £10 entry you roll six dice and if you get all 6s then you win £25k, nothing otherwise. They want insuring to indemnify them for the £25k prize.
In the examiner's report it says firstly (as a mark) "The school does have an interest in the risk because they will have to pay if someone rolls six sixes". This relates to the criteria that the insured must have an interest in the risk, to distinguish from gambling. When I attempted the question I thought that this wasn't really the case - once insured the school doesn't really care either way since it has no cost to them, and they may in fact want someone to win for the publicity!
In the comments beneath the mark scheme the examiners said "A large number said that the school did not have an interest in the insured event, even when they stated in (i) that this was to distinguish insurance from gambling, because if it was insured they made no loss if someone won.".
So at least I wasn't alone in thinking this! But could someone please clarify why it isn't the case? I don't want to make the same mistake again. I feel like I understand the principle generally - people don't want to crash their cars even if insured because they might injure themselves, don't want to make claims on contents insurance because their premiums will rise in future etc. But this seems like a one off event with no harm for the school if someone wins?
One of these is a school which is holding a game at a fundraising event. For £10 entry you roll six dice and if you get all 6s then you win £25k, nothing otherwise. They want insuring to indemnify them for the £25k prize.
In the examiner's report it says firstly (as a mark) "The school does have an interest in the risk because they will have to pay if someone rolls six sixes". This relates to the criteria that the insured must have an interest in the risk, to distinguish from gambling. When I attempted the question I thought that this wasn't really the case - once insured the school doesn't really care either way since it has no cost to them, and they may in fact want someone to win for the publicity!
In the comments beneath the mark scheme the examiners said "A large number said that the school did not have an interest in the insured event, even when they stated in (i) that this was to distinguish insurance from gambling, because if it was insured they made no loss if someone won.".
So at least I wasn't alone in thinking this! But could someone please clarify why it isn't the case? I don't want to make the same mistake again. I feel like I understand the principle generally - people don't want to crash their cars even if insured because they might injure themselves, don't want to make claims on contents insurance because their premiums will rise in future etc. But this seems like a one off event with no harm for the school if someone wins?