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Susan, an agent for an insurance company, wants to focus on those products that present the greatest risk. This focus would include all of the following products EXCEPT:

2 Answers

6 votes

Final answer:

Susan would focus on high-risk insurance products such as health, car, and life insurance for high-risk individuals, but not on low-risk products.

Step-by-step explanation:

Susan, an agent for an insurance company, looking to focus on products that present the greatest risk, would be involved with products that inherently come with high levels of uncertainty and potential for loss. This focus would typically include products such as health insurance for individuals with a family history of illness, car insurance for drivers with a history of accidents, or life insurance for individuals in high-risk occupations. However, she would not be focusing on products for those deemed low-risk, as these do not present the greatest risk to the company and are often offered with lower premiums due to the lower expected cost to the insurer.

User Jon Nordby
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8.4k points
4 votes

Final answer:

Susan would not focus on products catering to low-risk individuals since her aim is to address products with the greatest risk affected by issues of imperfect information and adverse selection.

Step-by-step explanation:

The question focuses on identifying which insurance products Susan, an agent, would not focus on if she aims to target products with the greatest risk. Based on the context provided, insurance products that present the greatest risk are those that are affected by issues of imperfect information, where there is a difference in what the insurer and the insured know. This can lead to adverse selection, where individuals with high risk are more likely to purchase insurance, potentially causing significant losses to the insurance company.

The insurance company may try to manage these risks by separating insurance buyers into accurate risk groups and charging them accordingly or by requiring that those with lower risks also purchase insurance. However, products that cater to individuals who pose the lowest risk, such as those who are unlikely to file a claim, would not be a focus for Susan, as these do not present the greatest risk to the insurer.

User Sachhya
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8.7k points

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