Insurance companies face the following problem(s):
A)administrative costs.
B)adverse selection.
C)moral hazard.
D)All of these answers are correct.

Question

Quizplus · Accepted Answer

Insurance companies face administrative costs in processing claims and managing policies. Adverse selection occurs when individuals who are more likely to experience losses purchase insurance, which can lead to higher costs for the insurer. Moral hazard refers to the tendency for individuals to engage in riskier behavior when they are insured, which can lead to increased claims and costs for the insurer. Therefore, all of these answers are correct.

Insurance Companies Face the Following Problem(s)