An insurance management tool to reduce moral hazard is to ________.
A)charge risk-based premiums
B)not allow restrictive provisions
C)reduce the deductible to zero
D)prohibit coinsurance

Question

Quizplus · Accepted Answer

Charging risk-based premiums can discourage individuals from engaging in riskier behavior or actions that increase the likelihood of making a claim. This reduces moral hazard, which is the tendency of people to take more risks or be more careless when they have insurance. Not allowing restrictive provisions, reducing the deductible to zero, or prohibiting coinsurance may not necessarily reduce moral hazard.

An Insurance Management Tool to Reduce Moral Hazard Is to ________