Insurance Companies Try to Mitigate the Problem of Adverse Selection

question 98

Multiple Choice

Insurance companies try to mitigate the problem of adverse selection by:

• A) asking potential customers a seemingly endless list of questions to gain as much information as they can about the person's risk characteristics.
• B) charging a higher premium to groups with similar ages or behaviors that correlate with risky behavior.
• C) charge a higher price to all individuals to cover the lack of information.
• D) All of these statements are true.