What is the main goal of risk avoidance in insurance?

The main goal of risk avoidance in insurance is to eliminate possibilities of loss. Risk avoidance involves taking proactive measures to identify potential risks and implementing strategies that completely remove those risks from consideration. For instance, a business might choose not to engage in certain activities or markets that pose significant risks, thereby ensuring that the company is not exposed to those potential losses. This strategy is particularly useful for risks that cannot be effectively managed or mitigated through other means, as it focuses on completely sidestepping any exposure to the identified risks, which in turn protects financial interests and ensures stability.

While maximizing profitability, increasing risk for the insurer, and mitigating financial impact are important aspects of insurance and risk management, they do not align with the specific and primary intent of risk avoidance, which is thorough elimination of potential threats.