Why do traditional insurable risks need to meet the independence requirements?

Traditional insurable risks need to meet the independence requirements for the following reasons:

It is generally believed that insurable risks need to meet independence, so as to better disperse risks and obtain economic compensation, because independence directly affects whether insurers can disperse the unsystematic risks of the subject matter insured. The so-called independence means that the probability and consequences of accidents with different risks are independent of each other for different risk units.

Characteristics of insurable risks:

As we all know, the most important thing for insurable risks of commercial insurance institutions is to meet the requirements of independence and randomness. Insurable risks must be "independent random events". Only in this way can we achieve the requirements of "risk dispersion and organizational economic compensation", and the insurance company will compensate the independent and random risk occurrence institutions in all risk units in concentration.

However, in practice, some products still cannot be realized. Agriculture, for example, obviously does not have this feature. Whether it is natural disasters, insect pests or various epidemics, they all show a high degree of temporal and spatial correlation. The large-scale risk loss caused by this correlation is something that insurance companies are unable and unwilling to bear.