What does "distressed risks" refer to in insurance terms?

"Distressed risks" in the insurance context specifically refers to insurance risks that have a history of multiple past claims. This categorization indicates that these risks are considered higher in uncertainty and often more costly to insure due to their history of claims. Insurers view these risks as problematic and may be less inclined to provide coverage, or they may impose higher premiums as a mitigation strategy due to the increased likelihood of future claims.

In contrast, the other options do not align with the definition of distressed risks. High premiums can be associated with a variety of factors, including the type of coverage or the insured's characteristics, but do not specifically denote distressed risks. Low-value property insurances focus on the economic value of the insured property rather than the claim history and stability of the risk itself. Lastly, guaranteed risks with stable histories are the opposite of distressed risks, as these typically exhibit reliability and lower likelihood of claims, making them more attractive to insurers.