Which is not a management practice for reducing the problems of adverse selection and moral hazard in insurance?

Question

Quizplus · Accepted Answer

Reinsurance is not a management practice for reducing the problems of adverse selection and moral hazard in insurance. Reinsurance is a practice where an insurance company transfers a portion of its risk to another insurer. Deductibles, restrictive provisions, and coinsurance are all management practices used to reduce adverse selection and moral hazard in insurance. Deductibles require the insured to pay a certain amount before the insurance coverage begins, thereby reducing moral hazard. Restrictive provisions limit the circumstances in which coverage applies, and coinsurance requires the insured to pay a percentage of the claim, which reduces moral hazard and adverse selection.

Which Is Not a Management Practice for Reducing the Problems