ABC Insurance Company sells auto insurance in one state.Recently,the state legislature passed a law that limits the use of an individual's credit history by insurers when selecting applicants to insure.This change in law will increase the possibility of unprofitable results for ABC.This type of hazard is an example of

Question

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The change in law imposed by the state legislature that limits the use of an individual's credit history by insurers is a legal hazard. Legal hazards refer to changes in laws and regulations that may increase the possibility of loss for an organization. In this case, the new law may result in ABC Insurance Company selecting riskier clients, who may be more likely to file claims in the future, leading to unprofitable results for the company.

ABC Insurance Company Sells Auto Insurance in One State