The Two Big Problems Facing Insurance Companies in Trying to Manage

question 82

Multiple Choice

The two big problems facing insurance companies in trying to manage risk are:

• A)risk pooling and diversification.
• B)risk pooling and adverse selection.
• C)adverse selection and moral hazard.
• D)moral hazard and diversification.

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Definitions:

Psychological Context

The mental and emotional factors that influence the perceptions, thoughts, and behaviors of an individual or group.

Communication

A transactional process in which symbols, such as words, gestures, and movements, are used to establish human contact, exchange information, and reinforce or change attitudes and behaviors.

Hypothalamus

A region of the brain responsible for producing hormones that regulate body temperature, hunger, moods, release of hormones from other glands, and sleep.

Love-Struck

Overwhelmed by feelings of romantic love, often to the point of being unable to think clearly or act rationally.