Insurance companies create wealth by
A)reducing the amount of risk that risk averse individuals must bear
B)reducing the amount of risk that risk loving individuals must bear
C)increasing the amount of risk that risk averse individuals must bear
D)moving an asset from low to high value use

Question

​Insurance companies create wealth by
A)​reducing the amount of risk that risk averse individuals must bear
B)reducing the amount of risk that risk loving individuals must bear
C)increasing the amount of risk that risk averse individuals must bear
D)​moving an asset from low to high value use

Quizplus · Accepted Answer

Insurance companies reduce the amount of risk that risk averse individuals must bear by pooling resources and distributing the risk among many policyholders. This reduces the likelihood of large financial losses for any one individual and allows them to take on more risk than they would be comfortable with otherwise. By reducing the amount of risk that individuals must bear, insurance companies create wealth by enabling people to engage in economic activities they might not otherwise feel comfortable undertaking.

​Insurance Companies Create Wealth by

Insurance Companies Create Wealth by