As a result of frequent flooding,the insurance market has noted a positive correlation between flooding and the amount of insurance monies paid out for such floods.Holding demand for insurance constant,if flooding is expected to continue to be a problem:
A)flood insurance providers will reap greater profits.
B)more insurance companies will provide such insurance.
C)flood insurance markets may eventually collapse since the risks of damage cannot be offset by diversification.
D)flood insurance premiums will decrease.

Question

Quizplus · Accepted Answer

Frequent flooding increases the risk for insurers, and if the risk cannot be diversified, it may lead to unsustainable losses, potentially causing the market to collapse.

As a Result of Frequent Flooding,the Insurance Market Has Noted