Final answer:
A true statement regarding juvenile insurance would acknowledge that insurance companies might avoid insuring high-risk clients or leave markets when rules setting low premiums are enacted. Regulations impact insurers' operations, ensuring premiums cover claim payouts and managing information asymmetry between insurers and insured individuals.
Step-by-step explanation:
A true statement regarding juvenile insurance must consider the dynamics of how insurance companies operate in response to state regulations. Notably, state insurance regulators can enact rules to set low premiums. However, this can lead insurers to avoid high-risk or medium-risk clients, or even exit markets entirely as they balance risk with the requirement that the average amount paid in premiums must be enough to cover the average amount received by insured individuals.
Cases in point include insurance companies leaving New Jersey over auto insurance premiums and State Farm's withdrawal from selling property insurance in Florida. Insurance purchasers often have more information about their risk levels which can lead to information asymmetry between the consumer and the insurer, a concept known as adverse selection.