Asked by Jasma Taylor on Sep 24, 2024

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​In the market for insurance,low risk customers are not served because

A) ​They do not like buying insurance
B) They are more costly to serve
C) Products designed to be attractive to them are also attractive to high risk types.
D) ​All of the above

Low Risk

Situations or investments that have a minimal chance of loss or failure.

High Risk

refers to situations or activities with a high potential for loss or danger, often in the context of investments or decisions.

Insurance

A financial product that provides protection against possible future losses in exchange for a premium.

  • Recognize the distinction between high risk and low risk clients and their corresponding treatment in the realm of insurance.
  • Explain the role of deductibles, co-payments, and classification in insurance pricing.
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YP
Yesica Pimentel1 day ago
Final Answer :
C
Explanation :
Low risk customers are not served because the products that are designed to be attractive to them are also attractive to high-risk types. As a result, insurers do not find it profitable to offer insurance products to low-risk customers. Low-risk customers do generally like to buy insurance, and they are typically cheaper to serve. However, insurers cannot make a profit by offering them insurance products, as these products are also attractive to high-risk types who are more likely to file claims. Therefore, insurers prefer to focus on high-risk customers who are willing to pay higher premiums, which helps them offset the costs of claims.