Final answer:
An insurance policy may not be issued with a preferred insurance premium when an insurance company faces adverse selection and is at risk of financial losses from high-risk individuals. Insurance companies may exit markets with strict regulations mandating low pricing for all, as exemplified by companies leaving New Jersey and State Farm's exit from Florida's property insurance market.
Step-by-step explanation:
An insurance policy may be issued with a preferred insurance premium in several situations, but there is an exception when the insurance company is facing the challenge of avoiding adverse selection. This occurs when there is a likelihood of insuring individuals who present high risk and are more likely to claim, which can lead to financial losses for the company.
Strict regulations and laws impacting the insurance industry might lead to a scenario where companies withdraw from a state rather than selling policies at mandated low prices, as observed with multiple insurers in New Jersey and State Farm's withdrawal from selling property insurance in Florida.