(a) Explain the following terms used in insurance.
(i) peril
(ii) hazard.
(iii) disclosure.
(b) Differentiate . between the following classes of risks: (i) pure and speculative risks; particular and fundamental risks; (iii) static and dynamic risks.
Explanation
(a)(i) Peril: Is an event that gives rise to a loss under a contract of insurance.
(ii) Hazard:. Is ,a factor tl it influence's the occurrence or severity of a risk.
(iii) Disclosure: Is an act of providing full. information about a risk proposed for insurance.
(b)(i) Pure and Speculative Risks: Pure risk deals with situations resulting to a loss or no loss and is insurable while speculative risk involves the situation that presents characteristics which have to do with profit, loss or break even and is uninsurable.
(ii) Particular and Fundamental Risks: Particular risks are those risks that have their impact on an individual or an identified group while fundamental risks are those that have their impacts on the society at large.
(iii) Static and Dynamic Risk: Static risks are that do not change both in origin and consequence but remain stable and measurable and is insurable while dynamic risks are risks that are related to change over time either due to technological development or change attitude of a person and non-insurable.