If insurance companies knew how risk-adverse their customers were:

Question

Quizplus · Accepted Answer

If insurance companies knew how risk-adverse their customers were, they would be able to offer policies specifically suited to them, thus averting adverse selection. Adverse selection occurs when people with a higher risk of making claims buy more insurance than those with a lower risk. If insurance companies can identify the risk-adverse customers and offer them policies that suit their needs, they would not have to worry about adverse selection.

If Insurance Companies Knew How Risk-Adverse Their Customers Were