Bundling several insurance coverages into one package policy may reduce:
A)adverse selection
B)moral hazard
C)morale hazard
D)competitiveness

Question

Quizplus · Accepted Answer

Bundling insurance coverages into a package policy can reduce adverse selection as it encourages consumers to purchase multiple coverages from the same insurer. This reduces the likelihood of consumers with higher-risk profiles only purchasing certain coverages, which can lead to adverse selection for the insurer offering those coverages. Bundling can also increase customer loyalty and retention as customers are more likely to stay with one insurer if they have multiple coverages with them.

Bundling Several Insurance Coverages into One Package Policy May Reduce