Which of the following terms describes a tendency of less favorable insurance risks to seek insurance more often than standard risks?
A. Risk avoidance
B. Adverse selection
C. Exposure
D. Field underwriting

Adverse selection is a tendency in insurance where less favorable risks seek coverage more frequently than standard risks, often leading to increased costs for insurance companies. It occurs when higher-risk individuals are more likely to purchase insurance, impacting overall premiums. Examples include health conditions and accident-prone drivers showing higher inclination to obtain insurance. ;

Answered by GinnyAnswer | 2025-07-07

The correct term that describes a tendency of less favorable insurance risks to seek insurance more often than standard risks is Adverse Selection . This occurs primarily due to the phenomenon of asymmetric information, where high-risk individuals are more aware of their need for insurance. It's important for both insurers and consumers as it affects pricing and availability of coverage.
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Answered by Anonymous | 2025-07-09