Question

From an insurance risk perspective, an applicant engaging in adverse selection is demonstrating which type of hazard?

A. Physical hazard
B. Legal hazards
C. Morale hazard
D. Moral hazard

Answer 1

From an insurance risk perspective, an applicant engaging in adverse selection is demonstrating an adverse selection hazard.

Step-by-step explanation:

From an insurance risk perspective, an applicant engaging in adverse selection is demonstrating adverse selection hazard. Adverse selection arises when individuals with a higher risk of loss are more likely to seek insurance, leading to an imbalance in the risk pool. This can result in higher premiums for the insurance company or inadequate coverage for policyholders.