Which of the following is a principle of the insurance industry?
A) Trade in risk can produce mutual gains.
B) Diversification can increase risk.
C) Deductibles add to the problem of moral hazard.
D) Adverse selection should be used to reduce insurance costs.

Question

Quizplus · Accepted Answer

Insurance operates on the principle that spreading risk among many parties can lead to mutual benefits, as it allows for the pooling of resources to cover individual losses.

Which of the Following Is a Principle of the Insurance