Which of the following is NOT a characteristic of workable insurance?

The characteristic that is not associated with workable insurance is the concept of paying only for known losses. Workable insurance fundamentally operates on the principle of risk management, which involves covering unforeseen and uncertain future events rather than just compensating for losses that have already occurred and are known.

In a typical insurance model, the pooling of losses refers to collecting premiums from a large number of policyholders, which helps spread the financial risk across many individuals or entities. This allows insurance companies to have the resources to pay for claims when they arise. Risk transfer is another essential component; by purchasing insurance, individuals and businesses transfer the financial risk of certain losses to the insurer.

Indemnification is a crucial function of insurance, where the insurer agrees to compensate the policyholder for financial losses, restoring them to their pre-loss financial position as much as possible. Workable insurance is characterized by its ability to protect against a range of potential future events, not just those that are already known, making the payment for known losses only inconsistent with its core principles. Therefore, the focus of insurance is on covering risks that may happen in the future, rather than limited to addressing losses that are already recognized.