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technique transfers only the financial, but not the legal,
responsibility for losses.

46. Transfer to an Insurer
It is possible to transfer contractually the financial
responsibility for certain exposures to possible loss to a
special type of entity whose primary function is to accept
these responsibilities for a price, called a premium.

47. Insurance Versus Gambling
The purchase of insurance is not gambling. The insured
transfers pure risk. The gambler deals with speculative
risk, in which there is the possibility of loss or gain.

48. Ideally Insurable Exposures
In Risk Management and Insurance by C. Arthur
Williams, Jr. and Richard M. Heins, the characteristics
of an ideally insurable exposure are detailed as follows:

 The exposure transferred should be the subject of
pure risk.

 There should be large number of independent entities,
all of approximately the same value, with similar
exposures and controlled by people interested in
insurance protection.

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