Final answer:
General pricing XL reinsurance random take aways is the concept of adverse selection in the insurance market and its impact on pricing and the sale of insurance policies.
Step-by-step explanation:
The subject of this question is Business. It pertains to the concept of adverse selection in the insurance market and how it can affect pricing and the sale of insurance policies.
Adverse selection occurs when there is asymmetric information between the insurance company and the drivers.
In this case, the insurance company cannot identify the high-risk, medium-risk, and low-risk drivers, but the drivers themselves know which risk group they belong to.
To cover the average losses, the insurance company sets the price of insurance at $1,860 per year.
However, this leads to those with low risks and medium risks deciding not to buy insurance, as the premiums are too high compared to their expected losses.
As a result, the insurance company only sells insurance to high-risk drivers, which results in considerable financial losses for the company.
The complete question is: What is general pricing XL reinsurance random take aways?