Question

If insurance premiums are going to be set below the actuarially fair level for a certain group, who will likely be targeted to make up the difference?

A. government regulators and taxpayers
B. insurance company shareholders
C. other buyers of insurance
D. taxpayers or other buyers of insurance

Answer 1

Answer:A. government regulators and taxpayers.

Explanation: Insurance premium is the amount of money initially paid by an organisation which can be a profit making Organisation or non profit making Organisation or an individual before the start of an insurance policy.

An actuarially fair level is the compensation level that is commensurate with the premium of the policy holder.

IF THE INSURANCE PREMIUM IS TO BE SET BELOW THE ACTUARIALLY FAIR LEVEL THE GOVERNMENT AND TAX PAYERS WILL BE EXPECTED TO PAY THE FOR THE DIFFERENCE.