Plain version: insurance works like a pool. The premiums of the many insureds who have no loss pay for the few who do. A risk is ideally insurable only when that pool can actually work.
The requisites of an ideally insurable risk:
A large number of similar exposure units, so the law of large numbers can predict losses.
The loss is accidental from the insured's standpoint, not intentional.
The loss is definite and measurable: it can be tied to a specific time, place, and dollar amount.
The loss is not catastrophic to the whole group at one time.
The premium is affordable for the buyer.
On the exam, the wrong answer in a requisites question is usually the feature an insurer does not want, such as a loss the insured controls or one event that hits nearly everyone.