Workers Comp Audit Stress Reducer
Use It For Your Next Premium Audit

Pure Risk Keeps Insurance From Being Seen As Gambling


Pure Risk Is Not Gambling

Playing Pure Risk cards
Wikimedia Commons – Antoine Taveneaux

Pure risk keeps the insurance industry from being considered gambling.

With a pure risk you have three situations:

  1. Chance of loss
  2. Chance of no loss
  3. No chance of gain


With Workers Compensation, an employee may be injured while on the job or may never incur a job injury. The insured would never receive a gain from either #1 or #2 above occurring. Pure risk is one of the underpinnings of insurance theory.

Gambling can occur in the case of:

  1. Chance of loss
  2. Chance of no loss
  3. Chance of gain


The #3 in the gambling list differentiates gambling and insurance.  Insurance may possess quite a few similarities to gambling.

Insurance makes the injured party WHOLE again.  The insured is entitled to what makes them the same as they were before the accident.

In referring to accidents, I mean:

  • Car Accident
  • Homeowner Loss
  • Workers Comp Accident
  • Loss of Business Use
  • Hundreds of other insurable risks*

    Frustrated Man Pure Risk At Gambling

An old friend of mine said that basically the insurance company bets that you will not have a car accident and you are betting that you will.   The premium represents the bet.    I heard this same scenario with everything reversed – the insured best they will have no accident and the insurance company bets that you will have an accident.

When I was in Las Vegas, I was betting on the craps table.  The young lady asked me if I wanted insurance on that bet.  I just smiled and said yes I will take the insurance.   Wow, that was a confusing term, I just took out insurance on a gambling bet so that if I lost, I would at least be made whole again.

Did I just turn a gamble into a pure risk?

Update – The Internal Revenue Service has been pursuing Insurance Captives as not being true insurance as there is no chance of a fortuitous loss.

©J&L Risk Management Inc Copyright Notice



James J Moore - Workers Comp Expert

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Management Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications


Get the latest workers' comp news FREE!

This field is for validation purposes and should be left unchanged.