Mr. Elian went pale. “Two hundred bolts are slightly water-stained.”

“Zero,” Mira whispered.

“Then she has no ,” Kael said. “If the ship sank, she would gain money, not lose it. That would turn insurance into gambling, not protection.” The Objective here was to prevent moral hazard and ensure insurance is used only for indemnification, not speculation.

“Exactly. The principle of ,” Kael said. “Insurance should put you back in the exact financial position you were in before the loss – no better, no worse.” He paid Mr. Elian the actual value of the lost silk (minus the stained bolts they excluded). The Objective : to prevent the insured from profiting from a tragedy.

“So the responsible party pays, not us?” Mira asked.

Mira nodded. “The ship might sink, or pirates might strike.”