Secrets of the Games Lawyers and Insurers Play

By Osman Pius Conteh

DO You Know There Are, At Least, 11 Ways In Which You Might Harm Or Be Harmed By Someone And For Which You Could Sue Or Be Sued, For Large Sums Of Money? Insurers Can Protect You Against One, But Not Against The Other Ten. This Book Will Help You Identify And Side-Step These 11 Behavioural Risks Before A Greedy Lawyer Forced You To Compensate His Client With Your Assets.

Imagine The Navigational Power You’ll Acquire For Dodging Legal Trouble After Learning The Formula Lawyers Use To Win Cases And Grab Money (Which Could Be Yours) And The Blame Games They And Insurers Employ To Shield Clients Against Your Claim.

Learn How To Interpret Words Like A Lawyer And Not Like A Dictionary To Safeguard Your Interest And How To Make Insurers Use Other People’s Money To Reverse Your Economic Losses Resulting From Your Careless Acts. You’ll Love That, Won’t You?

Case After Case Will Expose How Lawyers And Insurers Think And How Others Have Benefited Or Suffered From Them. Remember, No One Cares More About Your Sufferings Than You. Read The Book And Benefit From Other People’s Mistakes.

‘The Book Is Authoritative. I Recommend It.’ – Hon. Justice Emmanuel Eku Roberts

‘Osman Has Written A Witty And Reader Friendly Book.’ – Frederick Bowen-John, Director General Of The West African Insurance Institute

Osman Pius Conteh Is The Author Of Four Fictional Works: Double Trouble, Bitter Consequences, For Better Or For Worse And Unanswered Cries Which Won The Macmillan Writers Prize For Africa And Was Nominated For The Impac Dublin Literary Award. Secrets Of The Games Lawyers And Insurers Play Is His First Textbook. He’s The Senior Underwriting Manager Of A Reputable Insurance Company And Has Used His Understanding Of The Games Lawyers And Insurers Play To Protect And Defend His Company’s Assets.

• Language: English
• Publisher: Osman Pius Conteh
• Release date: Jun 21, 2021
• ISBN: 9781005924225

Book preview

Risk Management

The Protect Your Best Interest Game

1.1 Risk Management Game – How Do You Play It?

Jamal: The risks you face in life and business, how do you handle them? How do you defeat them before they force you to use your money rather than your brains, to handle them?

Idris: It depends on the type of risk and the circumstances.

Agnes: Many risks can be solved before they happen. In fact, do you know you could solve or minimize the economic impact of certain risks by using lessons from the games lawyers and insurers play, which we are going to share with you?

Idris: I hate professional liars, especially lawyers and insurers, present company exempted. So why should I be interested?

Agnes: Because Jamal and I will use a basic version of the risk management concept to enable you take deliberate advantage of how lawyers and insurers think, in order to protect your assets.

Idris: How would you do it?

Jamal: For a simplified start, imagine you planned to go clubbing tonight until the dark hours of the morning.

Idris: Too risky. Your sister will kill me.

Agnes: Zainab adores you, Idris. Thousands of suitors grovelled for her hand, but she married you.

Idris: Because I didn’t grovel, but she’ll kill me in a heartbeat if she thought I went clubbing for girls.

Jamal: Who said anything about girls?

Idris: What difference would it make if she thought it and killed me?

Jamal: Right there! See? You managed a risk, in your head, before it happened and caused you harm.

Idris: Because we all have things that kick us in the behind, either toward pleasure or away from pain. In my case, there’ll be more pain if I went clubbing than pleasure.

Jamal: The pain/pleasure principle made you do risk management. I mean, you identified a risk, measured its cost and selected avoidance as the best method of handling it.

Idris: Trust me, even Goliath would select avoidance instead of waking up the giant temper sleeping inside Zainab. I’m motivated.

Agnes: With that type of pain/pleasure motivation as a guiding principle, imagine the risks you could avoid while reducing the impact of others on your private and business life, after you have learned simplified ways of doing risk management, using lessons you’ll harvest from our sessions.

Idris: Not interested.

Jamal: We’ll demystify the whole thing with just the basics. It’s why I wanted to use the simple example of hitting some popular clubs tonight, just to illustrate a few things about managing risks.

Idris: Jamal, I won’t go clubbing, even in my imagination. It’s dangerous. I might talk in my sleep. Zainab is a light sleeper. Agnes is here. Use her as your club addict.

Agnes: Club addict?

Idris: You don’t look like an insurance broker turned lawyer. You are single and petite, an adult trapped in a teen body. Chilling past midnight is your thing. You’re a good example of a bad example.

Agnes: Because you’re as big as a truck doesn’t mean I’ll let you run over me like a pedestrian. I have handled bigger risks. Successfully.

Idris: Yes, in the safety of a courtroom under police watch.

Jamal: Are you two done circling each other in your fake chicken fight? I want to illustrate a point.

Agnes: Use me, Jamal. You have my smiling approval.

Idris: Playing the woman card.

Jamal: She’s a she, Idris, and can only play the woman card.

Idris: You would notice. You are two sides of the same coin. You left your law practice to become an insurer. So, Mr. Insurer, what point do you desire to illustrate?

Jamal: Risk management. Agnes, let’s play pretend.

Agnes: I love playing pretend. I once rehearsed being a corpse in a play that wasn’t performed.

Jamal: That qualifies you for what I have in mind. Imagine you planned hitting several clubs tonight with friends until way past midnight, only to realize you won’t have a ride back home.

Agnes: Why?

Jamal: Neither you nor your friends own a car or motor cycle. There’s no other means of transportation except your feet.

Agnes: I’ll be in a pickle.

Jamal: The ugly part is, you live at the end of a dark street and you know bad things tend to happen to good people who live at the end of dark streets late at night. Pause and think. What have you done?

Idris: She paused to think.

Jamal: She identified a risk. Bad things tend to happen to good people who live at the end of dark streets very late at night.

Agnes: I identified a risk, Idris, without breaking a sweat. I can handle you. What next, Jamal?

Jamal: Analyse the risk. Measure its cost. Its impact. For example, you could be ambushed and chased by muggers. You are not Usain Bolt. Out-running professional criminals in the dark is not your idea of fun. The worse part? You could get injured and hospitalized. Or end up in a coffin. What have you done in this scenario?

Idris: She got herself injured, hospitalized and now she’s dead in an imaginary coffin.

Agnes: I analysed and measured the cost of the risk to me, fool.

Idris: I thought your best role is playing dead in a coffin designed by Jamal’s imagination.

Jamal: What will you do next, Agnes?

Idris: What do frightened girls do best? Run screaming as if her fake Brazilian hair is on fire.

Jamal: No. She’ll look for a method of handling the risk.

Idris: Like the one she’s using now? Curled like a foetus, trying to hide inside her skin and sucking thumb like her life depended on it?

Jamal: It’s a game of pretend.

Idris: Not anymore. Look at her. She’s trapped in the horror movie you are running inside her brain. You know she lives at the end of a street with no street lights.

Jamal: She’s a good actress. Agnes, it’s a mental movie. You are not in any physical danger.

Agnes: I know.

Idris: Psychological danger, then.

Jamal: Idris, we are searching for a method of handling a hypothetical mugging risk on a dark street, late at night. I see several options.

Agnes: Share.

Jamal: You could select to (1) return home earlier, at a time honest citizens are still walking the streets, (2) return home with neighbours for crowd protection, (3) sleep over at a friend’s house, or (4) stay home, in bed, with a good book.

Idris: Alright, I’ll bite. What you guys are doing excites me, some. Risk management seems like a deliberate, logical and creative, effort to identify a risk, measure its cost and look for methods of handling it. What else?

Jamal: Select an appropriate method and implement it.

Agnes: I elect the last option. Stay in bed with a great book.

Idris: Let’s have another example. Use me this time. Agnes didn’t enjoy being frightened. Our lawyer is only brave with her mouth.

Jamal: Alright, Idris. Picture yourself driving a car along a crowded street in Freetown or Lagos, infested with thieves pretending to be honest citizens. Suddenly, you identify a risk.

Idris: Where?

Jamal: Your bag, containing your money, laptop, iPad and important documents, is lying on the front passenger seat.

Idris: Where’s the risk?

Jamal: The car windows. You had rolled them down for fresh air because the air conditioner went on strike two weeks back and you haven’t settled the dispute.

Agnes: He would rather roast like fish on a grill than fix it.

Jamal: Take in your surroundings, Idris. The traffic has slowed to a snail’s crawl. The street is as narrow as a footpath. Pedestrians, like ants over a lump of sugar, are competing with your car for use of the road.

Agnes: Welcome to Freetown. The British thought our population will not grow when they were laying the footpaths they called roads.

Jamal: Some of the pedestrians bumping against your vehicle might be professional criminals, expert grabbers of things from rolled down car windows. Your bag could be targeted by the quick hand of a criminal. You have identified and measured the cost of the risk. What’s your next move?

Idris: Run! The thief’s holding a knife!

Agnes: Fool! He’s reaching into your car through the open window.

Idris: You guys said imagine. It’s my imagination, not yours.

Agnes: Stay in your imagined car, then! Your bag, with nude photos of Zainab, is on the front seat. The windows are down. The identified threat has not arrived. Yet. What would you do?

Idris: Use your own imagination.

Agnes: Do you still want fresh air in the car?

Idris: No.

Agnes: Is fresh air worth the loss of your bag and Zainab’s photos?

Idris: Of course not.

Agnes: So look for solutions, Idris. I see three. (1) Wound the car windows all the way up and wait until you get to a safer street, or (2) lay the bag on the car floor, or (3) roll the windows half way up and still lay the bag on the car floor.

Idris: What next?

Jamal: Select one of the methods to handle the risk.

Idris: Option three.

Jamal: Beautiful. You just did risk management. The process of identifying a risk, measuring its cost, selecting and implementing a method of handling it.

Idris: I have an idea. What if I went clubbing this weekend, would my newly acquired risk management skills work on Zainab?

Agnes: I’ll kill you myself, then slap you awake so she could do it again.

Idris: You guys told me to use my imagination, only to murder it before I could give birth to an idea.

Agnes: It’s for your own safety. You talk in your sleep, remember?

Idris: Never mind. Jamal, give me an insurance example.

Jamal: Motor Insurance. Imagine it took you several years to save enough money to buy your dream car.

Idris: Lamborghini.

Jamal: I’ll rephrase. Imagine I gifted you a Lamborghini because you can never afford one even if you lived long enough to beat Methuselah’s age record of 969 years.

Idris: Leave my future age alone. Focus on the example or I’ll leave.

Jamal: While holding the car keys, a thought dropped into your mind. As a motorist, you could become liable for an accident, resulting in property damage, injury or death.

Idris: It’s all happening inside my head, right? Because I don’t do car accidents either. But in my head, I’ll analyse or measure the possible cost of an accident and come up with methods of handling it. Share some methods with me, Jamal. You are the risk manager, here.

Jamal: Three options. You could (1) lock the car in your garage forever, or…

Idris: What! Lock a Lamborghini? Are you on drugs? Dad said: a Lamborghini in the garage is safe, but that’s not what Lamborghini’s are built for. Not an option, Jamal. Next method please.

Jamal: Or (2) purchase Motor Third Party insurance which will pay claims for your liabilities to other road users due to your horrible driving skills, or (3) sell it and never own a vehicle again.

Idris: Option 2. Third Party motor insurance. But what if my car is scratched, damaged or wrecked? Would the Third Party insurance repair or replace it?

Agnes: Good risk management question. Identify risks to your asset instead of just the risks to other road users resulting from your bad driving skills.

Idris: Thank you for the way you packaged that insult with a compliment and tied a heart-shaped ribbon on it.

Jamal: Forget the compliment. Focus on the risk management method you selected. A Third Party motor insurance pays only for third party damages, but not for first party damages.

Idris: I don’t understand.

Jamal: You are the first party in an insurance contract, the offeror. The insurer or insurance company is the second, the offeree. Damage to your vehicle (as first party) is excluded.

Idris: I need Third Party and car repairs and replacement insurance.

Jamal: Good thinking. Selecting the most appropriate method of handling the risk of damage to or total loss of your asset plus your third party liabilities.

Idris: What insurance policy would cover those risks?

Jamal: Comprehensive Motor insurance. It covers your liabilities to other road users (third party liabilities) and loss of or damage to your car. Problem solved.

Idris: Problem not solved.

Jamal: It is. You have employed transfer of both risks to an insurer as your best risk management option.

Idris: That’s my problem. Insurance. I like you, because you are a friendly brother-in-law, when you aren’t getting under my skin for your sister. But I don’t like insurance people. You take clients’ money, invest it for your selfish interest and refuse to pay claims. How do you sleep at night, Jamal?

Jamal: See, right there! Intrepid. Unafraid to ask hard questions. What questions would you ask God if given the opportunity?

Idris: What!

Jamal: The prophet Habakkuk wasn’t afraid to ask God questions philosophers and other scholars consider as tough.

Idris: What questions?

Jamal: He asked, ‘Why do you make me witness wrongdoing? And why do you tolerate oppression? Why are destruction and violence before me? And why do quarrelling and conflict abound?’¹

¹ (Habakkuk 1:3.)

Idris: In other words, why has God permitted human suffering?

Jamal: Contrary to popular conjectures and conclusions of many philosophers and scholars, the answer, contained in the bible, is intellectually and emotionally satisfying.² A degree in Theology is not a prerequisite to understanding it.

² (See Lesson 26 of the book ‘Enjoy Life Forever - An interactive bible course’ published by the Watch Tower Bible And Tact Society of Pennsylvania on jw.org.)

Agnes: That’s food we’ll cook in another kitchen, another day, Jamal. For the purpose of our sessions, Idris, we just want you to play Habakkuk. That’s why we brought him up.

Idris: How? Ask God questions?

Agnes: Express your views. Don’t hold back. Ask the hardest questions your mind can manufacture. A degree in law is not a prerequisite to understanding the topics we’ll be covering. The only requirement is common sense.

Idris: I have some, although people sometimes use theirs to critic mine as if they were its developers and I’m making an unauthorized use of their app.

Jamal: Use it to ask questions, to explore the games lawyers and insurers play. Be as inquisitive as a monkey. You’ll find it informative and entertaining.

Idris: But I don’t like lawyers and insurers. They can make the truth look like a lie and a lie like the truth. To them, money is thicker than evidence.

Agnes: What if we’ll show you the prosecution formula lawyers use for winning cases and tons of money awards for their aggrieved clients. I have used it and won more times than I have lost, for my clients. The prosecution lawyers used it successfully in the murder tial of George Floyd.³

³ (The State of Minnesota v. Derek Chauvin 27 - CR - 29 – 12646)

Idris: Have you been smoking weed? It’s tantamount to exposing trade secrets of how you liars, lawyers, scam people.

Jamal: Come on, Idris. You know Agnes and I don’t scam people. Yes, there are good and bad lawyers and insurers, but the formula we’ll show you boils down to not whether an insurer or lawyer is good or bad, but facts and rules, and how to use them to protect your assets. Is that a bad thing?

Idris: Get out of here! Lawyers and insurers. Scary combination, like Shylock lurking inside Judas. Which part is Shylock?

Jamal: Our intent is to share with you ways you can protect yourself and your economic interest from some specified risks.

Idris: Trying to sell me sand in the Sahara Desert, are you? Sleazy sales couple.

Agnes: We aren’t a couple. We are just friends.

Idris: Never mind. Fact is, I won’t let you hypnotize me with the way you liars think.

Jamal: Our information will give you leverage in your private and business life because you’ll be thinking LIKE a lawyer and not AS a lawyer. See the positive difference?

Idris: So what?

Agnes: Did you know majority of civil litigation cases are settled without a trial?

Idris: Why should I care?

Agnes: The things you’ll learn will help you regulate your personal and business life, forecast your chances of avoiding certain risks while minimizing the impact of others without a courtroom fight.

Idris: Drop the advert. I’m not biting.

Agnes: We’ll also share with you the defence formula lawyers use to protect and defend a client, like the formula Derek Chauvin’s defence lawyer used in the murder trial of George Floyd.

Idris: He lost. Hello.

Agnes: Yes, but mainly due to the abundant video footage against his client, which literally turned the jurors into eyewitnesses. We want to show you how YOU can use these lawyer games to protect your best interest and Zainab’s.

Idris: You are saying i need to think like a lawyer and an insurer to protect my wife and our best interest in the courtroom of life.

Agnes: Yes. Imagine the different ways in which you could use all this knowledge, like a map, to navigate you and Zainab out of legal trouble as you both live your private and business lives as you desire.

Idris: Exposing to me how lawyers and insurers think. Trade secrets! Awesome! I like that.

Jamal: Zainab wants you empowered to regulate your conduct and protect your business against avoidable legal and economic risks. An attitude adjustment.

Idris: I don’t need her to babysit me.

Agnes: She called you her Teddy Bear.

Idris: Well, I’m here for the talks, am I not? Dad said: A boy willing to bathe with cold water shouldn’t complain about the cold. It’s a sacrifice I’m willing to make. For both our sakes.

Agnes: A disclaimer, then. The information we’ll share with you is on ‘as is’ basis. We are not liable for any damages to you, economic or otherwise, in connection with its use. The legal materials and cases are for illustrative purposes only and not law in force.

Idris: Like I said: a boy willing to bathe with cold water shouldn’t complain about the cold. Proceed.

CHAPTER 2

Some See Risks

Others See Opportunities.

2.1 Risk – Different Shades Of Meanings.

Jamal: Different people define risk differently. The way a business person defines it (as an opportunity to make money) would differ from a lawyer’s, fire fighter, doctor, policeman, or engineer.

Agnes: If you brought insurance people into the mix they would wade in with their different shades of meanings. To not confuse you, we’ll simplify the view, using an insurer’s camera.

Idris: How?

Jamal: I’ll tell you a story and use its parts to highlight the varied meanings of risk, but from an insurer’s viewpoint.

Idris: I love stories. Brain food. Proceed.

Jamal: Picture Mr. Businessman. Owner of two supermarkets. Likes driving himself on weekends. This Saturday, he leaves home and is driving his family to the beach for a picnic. His phone screams. He has forgotten his earpiece at home again. He takes the call.

Idris: Bad news?

Jamal: It’s one of his managers. The new supermarket is on fire. A fire truck is on its way, but the flames are licking up his asset like a kid his ice cream before the school yard bully shows up.

Idris: That could be me. Not the bully, the supermarket owner.

Jamal: Forget you. Mr. Businessman, under shock, forgets to signal a turn at a junction. He becomes Mr. Negligent. Tyres screech. Horns blare. A vehicle swerves to avoid him. His foot hits the brakes. Too late. Loud crunch of metal kissing metal fills the street. The other car, a taxi, shudders to a halt. Bonnet crumpled. Engine hissing steam. Front seat passenger is injured and rushed to the central hospital.

Idris: What happens next?

Jamal: Our insurer’s camera spans for types of risks. Did Mr. Businessman know his asset would be destroyed by fire this year?

Idris: Not to my knowledge.

Jamal: Not knowing when a loss would occur is referred to as a risk. Risk is, therefore, uncertainty. Uncertain about a negative future event.

Idris: My teachers lied to me, then. They said ignorance is bliss. Ignorance is blissful risk.

Jamal: Here’s another one. Anything that causes a loss, like fire or the car accident, is referred to as a peril. Although the fire that caused the loss of the supermarket is a peril, insurers also refer to it as a risk because its occurrence can lead to an economic loss.

Idris: Different shades of meaning.

Jamal: The supermarket was insured. Insured assets are referred to as the subject-matter of insurance. A subject-matter of insurance, like the supermarket, is also called a risk, because its loss or damage is a financial or economic loss.

Idris: Interesting. Any other shade of meaning?

Agnes: Mr. Businessman was negligent. He has to repair his vehicle and the taxi, pay the taxi owner for loss of use (as the taxi would be undergoing repairs), pay the medical bills of the injured passenger and compensate her for pain and suffering. In insurance, negligence is also termed a risk, because it could lead to a financial loss, to the wrongdoer or his insurer.

Idris: I hope I’ll remember these shades of meanings.

Agnes: It’s why we started with a story, for easy recall. Like you said, stories are brain food. If you can recall the story, the shades of meanings will leap at you.

Idris: Is this relevant to the games lawyers and insurers play?

Agnes: This background (and the time-travel we’ll soon do in the next chapter to ancient China, Babylon, etc.,) is designed to help you appreciate the topics ahead.

Idris: You have my ears, then.

Jamal: Everything ahead, the origins and logic of insurance, the court cases exposing other people’s mistakes, the ingredients required to cook a valid contract, the thinking tools for interpreting documents, the special principles of insurance contracts which will empower you to know what insurers are thinking, etc., are all about sharing with you the games for managing risks.

Agnes: Lock these points in your mind and the topics will be easy for you to understand. Then you can customize them to regulate yourself and your business to protect your interest.

2.2 Associates Of Risks - Perils And Hazards.

Jamal: Some people, including some insurers, sometimes use the words risk, peril and hazard interchangeably. But strictly speaking, these associates of risks distinguish themselves from each other.

Idris: You told me a peril is anything that causes a loss, like the supermarket fire and Mr. Businessman’s negligence. What’s a hazard?

Agnes: It’s a situation that creates or increases the chance of a loss occurring. Mr. Businessman, talking on a hand-held phone while driving was a hazard. The situation created or increased the chance of an accident.

Jamal: Faulty electrical wiring or the watchman smoking where petrol was stored for generator use, are hazards which could have increased the chances of a fire occurring.

Idris: With all these shades of meaning, can risks be classified by similarity or dissimilarity?

Agnes: Similar things can be different. Different things can also be similar. Same with risks. They have been grouped and distinguished from each other according to their dissimilarity and impact.

Idris: Explain.

Agnes: To expand, we’ll consider four risk groups. Each with its twin.

Idris: Monozygotic?

Agnes: Easy with the big words, big man. You might choke on one while no dictionary is around to do a Heimlich manoeuvre.

Idris: Monozygotic means identical twins.

Jamal: The twin risks in each group are kind of fraternal, more like male and female. Allow me to introduce them.

2.3 Risks – Grouped Like Fraternal Twins.

Jamal: Here they are, the twin risks:

(1) Financial and Non-financial risks.

(2) Static and Dynamic risks.

(3) Fundamental and Particular risks.

(4) Pure and Speculative risks.

2.3.1 Financial And Non-Financial Risks.

Agnes: Anything that would cause a loss is a risk. The loss may or may not be financial. For example, the supermarket fire and car accident were economic losses.

Idris: If I were a building contractor or garage owner, I will see them as business opportunities. You saw risks, I saw opportunities.

Agnes: Right. When a possible loss, like the supermarket fire, is quantifiable, the insurer would have an idea of what it would cost, in the event of a loss, to put Mr. Businessman back in the position he was before the loss occurred.

Idris: What of non-economic risks?

Jamal: They are risks an insurer cannot quantify. For example, Mr. Businessman lost his iPad and smart phone containing cherished family photos he had not cloud-saved. While his insurer could quantify the loss of the gadgets, it could not quantify the sentimental loss of the cherished photos. It’s a non-financial risk.

Idris: Which of the two is insurable?

Jamal: Financial risks. They can be price tagged. Insurers can budget for them. So can you, if you have the resources and chose not to transfer the risk to an insurer.

2.3.2 Dynamic And Static Risks.

Jamal: Dynamic risks are financial losses suffered due to changes (the dynamics) in the economy. They are unpredictable. For example, price change can cause consumers to buy more or less of a service or goods.

Idris: And static risks?

Agnes: They occur in the face of little or no economic change. For example, even if the price of things and consumer taste remain unchanged, these risks could still take place.

Idris: Caused by what?

Agnes: Perils of nature (e.g. floods, earthquakes) and the dishonesty of people, (e.g. thieves). When a static loss occurs, the asset is lost or destroyed.

Idris: Which of the two is insurable?

Jamal: Static. You can buy insurance to protect your financial interest in property against loss or destruction by natural perils (e.g. flood) and dishonesty (e.g. theft).

Idris: Because insurers can make a fair estimate of what it would cost to put me back in the position I was before the loss occurred?

Jamal: Yes. It’s quantifiable. You can also budget for it if you prefer to retain rather than transfer the risk to an insurer.

Idris: I’ll think about it.

2.3.3 Fundamental And Particular Risks.

Jamal: Fundamental or catastrophic risks cause losses to either the population or a large segment of it. Examples are wars, unemployment, inflation etc. Insurers flee from them. They are unpredictable and unquantifiable in advance.

Agnes: On the other hand, particular risks are individual events affecting individuals instead of large segments of the population. A burning house or bank robbery are examples of particular risks. The risk is measurable and insurable.

Idris: Insurers! When you identify a risk but can’t measure its cost, you run. When the cost is measurable, you lick lips and rub hands like a monkey with peanuts.

Agnes: Nice way to insult your brother-in-law for getting in your face over his sister.

Idris: You guys told me to express myself. Have you changed your minds? Was this a particular risk you failed to foresee and quantify?

2.3.4 Speculative And Pure Risks.

Jamal: To speculate means to guess. You know that. Call it an educated guess and it’s still a guess. It has one outcome out of two. Profit or loss. Win or lose. For example, gambling.

Agnes: A business person like you engages in speculative risks. The outcome is profit or loss. Profit if people buy your products/services and loss if they don’t. Insurers are averse to insuring speculative risks because they are not measurable.

Idris: What of pure risks?

Jamal: They are measurable. They are the chess pieces of insurance games. They involve situations where the outcome is loss or no loss. For example, a motorist like Mr. Businessman faced the possibility of an accident or no accident. Loss or no loss.

Agnes: When he became the owner of property, like the supermarkets, he faced the possibility of loss or no loss by fire damage, earthquake, etc.

Idris: You said pure risks are the chess pieces of insurance. Elaborate.

Jamal: They are grouped into four classes. I want you to use the classification like a risk management map to help you identify risks you can transfer to an insurer and, thus, avoid using your money to handle them.

Idris: Seriously?

Jamal: Yes. If you suffered an insured loss, your insurer is obligated to use its financial resources to put you back in your pre-loss position. You’ll like that, won’t you?

2.3.4.1 Pure Risks – The Chess Pieces Of Insurers.

Agnes: (1) Personal risks,