An Insurance Company Can Prevent the Adverse Selection Death Spiral

question 62

Multiple Choice

An insurance company can prevent the adverse selection death spiral by selling to groups of people such as groups of employees in a workplace. This will allow the insurance company to:

• A) increase the chances that both healthy and unhealthy people will sign up for coverage.
• B) increase the chances that only healthy people will sign up for coverage.
• C) force both healthy and unhealthy people to sign up for coverage.
• D) charge higher prices because the employer will pay the premiums.

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Definitions:

Retraining Employees

Involves updating the skills of employees to keep them efficient in their current jobs or prepare them for new roles within the organization.

Working Conditions

The environment, terms, and circumstances under which employees work.

Internal Supply

The source of talent within an organization that can be utilized to fill open positions or roles through promotions or internal transfers.

Staffing Policies

Guidelines and practices that organizations follow to govern the recruitment, selection, and placement of employees.