Parametric insurance coverage. Parametric insurance pays out when a predefined event occurs and the loss exceeds a specific dollar amount. (Photo: Bongkam Graphics/Shutterstock)

A fact that has been hard to swallow and often debated is that insurance is not available to cover every loss.

There are various reasons for this. Perhaps the loss cannot be modeled with any degree of predictability to enable insurers to set an appropriate rate for coverage, or the loss is not accidental and could have been prevented. Maybe the event would be so widespread and catastrophic that insurers could never take in enough premiums to cover all the policyholder losses, which of course can be said of pandemics.

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Karen Sorrell, CPCU



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