If insurers didn't practice underwriting,what would happen?
A)They would save a lot of time and money by not asking all those nosey questions
B)They would make a handsome profit since they would get to sell a lot of insurance to a lot of people
C)The insurance mechanism would become unfeasible
D)The insurance mechanism would become the largest money making venture in the United States

Question

Quizplus · Accepted Answer

Underwriting is the process of assessing risk and assigning appropriate premiums to insure against that risk. If insurers didn't practice underwriting, they would not be able to accurately assess risk and set appropriate prices. This would lead to adverse selection, where the people most likely to make claims would be the only ones buying insurance, making the insurance mechanism unfeasible.

If Insurers Didn't Practice Underwriting,what Would Happen