Moral Hazard 2
Moral Hazard 2 :
"....insured parties take greater risks because they know they are insured). Insurers try to minimize adverse selection by marketing insurance to a broad class of customers, and by charging higher premiums to higher risk customers.85 Insurers can address moral hazard by imposing deductibles - or requirements that policyholders bear certain first dollar losses - before receiving insurance coverage. (Financial Services Roundtable, Nation Unprepared for Mega-Catastrophe, 2007, 45)
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