What Is One Way Insurers Address Moral Hazard (Hidden Action)problems

question 1

Multiple Choice

What is one way insurers address moral hazard (hidden action) problems to align the interest of the insured with the insurer?

• A)Underwriting all applicants for insurance
• B)Charging lower premiums for riskier ventures
• C)Performance based incentives (i.e. linking premiums to presence of fire detectors)
• D)Insuring different parties from the same industry
• E)Require full disclosure of all information (i.e. health status prior to issuing an income annuity)

---

Definitions:

Crossmember Spread

The distance between crossmembers, which are structural components that provide support and rigidity to a vehicle's chassis.

Sub-Frame

A structural component that provides support and attachment points for other systems or components within a larger framework, such as in vehicles or machinery.

Dolly Legs

Trailer landing gear system; consists of gear-cranked, retractable legs reinforced by fixed gusset arms.

Lift Axle

A dead axle that can be raised and lowered using air pressure.