Question: One problem facing insurers is that there is a risk that a person will act differently if he/she does not bear all of the consequences

One problem facing insurers is that there is a risk that a person will act differently if he/she does not bear all of the consequences of his/her actions. For instance, people with auto insurance policies may drive less carefully than they would drive if they were going to have to pay the full amount of any damages they caused/created. This problem is known as:

A. Adverse selection

B. Consumer deception

C. Moral hazard

D. Insurance fraud

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Dremmon Corporation reports the following information from the last fiscal year: \ table [ [ , Units ] , [ Beginning inventory of finished goods, 1 6 8 ] , [ Production during the year, 7 5 1 ] , [...

Tips from The Stuff of Heroes! The following is an excerpt from The Stuff of Heroes, by William Cohen, a retired Air Force major general. In the book Cohen includes dozens of inspiring stories from...

1. Evaluate the often tried approach of adopting past solutions to similar problems encountered today? Is this a form of linear thinking or not? 2. Why is linear thinking dangerous? 3. Whether the...

Review the documents Choose at least two (2) competencies on the Project Phases chart or from the master list and provide commentary on their usefulness to be considered an important competency for a...

Here is the Case study and the brief together please do from part 2 to part 5 by reading the case study. P.S don't reat the whole case study its bit lengthy. Just include all the questions asked in...

Create a case study that addresses the following questions: What was the ethical situation, and what led to the problem? How did the organization respond? What were the consequences of these actions?...

Read Text: The Modern Law of Torts A Contemporary Approach By Douglas Lee Donoho Chapter 2 Pages 19 - 40 Complete Assignment 2.1,Garratt; Spivey Problem2a; Assignments 2.2, 2.3, 2.4 Baska; Hendrix...

1.* A partner in a firm which gives negligent advice may personally liable for the adverse consequences 2. * A director in a limited company will usually be held personally liable for the...

BACKGROUND An SM bond is a 35-year Australian government bond with a face value of $1. They are marketed to consumers saving for retirement (who buy the S part) and investors (who buy the M part)....

In the Opinion of the Court in Bostock v. Clayton County, Georgia case. Why the Court believes that "sex" means the same thing as "sexual orientation?" "How" does the Court argue for that position?...

"This hotel business wouldn't be so bad if it wasn't for the people!" Derek Duke thought as he considered his first 11 months as general manager (GM) at The Regal Pointe Hotel and Spa. Duke was...

A person has preferences of the form U(pounds of restaurant food, pounds of home food) = 0.6* In(pounds of restaurant food) + 0.4* In(pounds of home food) Which basket would they prefer? Note that...

Sometimes it is more appropriate to use actual support cost allocations, but at other times it is better to use estimated allocations. Explain when each type of allocation is more appropriate.

1 . Which one of the following is true about data and information? a . Data are raw facts and information are output. b . Information is construction of data. c . Data are output, and information is...

A company is preparing completing their Cash Budget. The following data has been prepared for cash receipts and payments. January February March Cash receipts $1,061,200 $1,182,400 $1,091,700 Cash...