What does the acronym CANHAM in insurance refer to?

The acronym CANHAM in insurance is a mnemonic that helps professionals remember specific characteristics that risks must possess in order for insurance to be viable and effective. Each component of the acronym represents a key feature that assesses the insurability of a risk:

• Calculable: This means the risk must have predictable loss amounts that can be estimated based on historical data.
• Affordable: The premiums associated with the risk must be cost-effective for both the insurer and the insured, so that insuring the risk is financially feasible.

• Non-catastrophic: The risk should not pose a likelihood of causing massive losses in a single event that might jeopardize the insurer's financial stability.
• Homogeneous: Similar risks should be grouped together, allowing for easier analysis and premium development.
• Accidental: The losses must occur due to accidental events and not be intentional; this ensures fairness in the insurance system.
• Measurable: The severity and frequency of the losses must be quantifiable, so that appropriate coverage limits can be established.

These components are essential in the underwriting process to ensure that the insurance product offered is viable and beneficial for both the insurer and the policyholder. Thus, the acronym CANHAM provides a