Which of the following practices of insurers deter moral hazard?
A)Setting a uniform premium structure.
B)Requiring people to purchase the same coverage.
C)Arranging for reinsurance to cut the risk of unexpectedly large claims.
D)Conducting security checks without notice and terminating the policy whenever required.

Question

Quizplus · Accepted Answer

Conducting security checks without notice and terminating the policy whenever required can deter moral hazard by ensuring policyholders do not engage in risky behavior, thinking they are fully covered without consequence. This practice encourages policyholders to act more cautiously, knowing their policy could be terminated if they are found to be acting recklessly or fraudulently.

Which of the Following Practices of Insurers Deter Moral Hazard