Question

Insurance companies' attempts to minimize adverse selection explains which of the following insurance practices?

1. Risk-based premiums
2. Deductibles
3. Restrictive provisions
4. Prevention of fraud

Answer 1

risk based premiums

Explanation: Risk-based deposit insurance is insurance with premiums that reflect how prudently banks act when investing their customers' deposits. The idea is that flat-rate deposit insurance shelters banks from their true level of risk-taking and encourages poor decision-making and moral hazard.

Answer 2

Step-by-step explanation:

1. Risk-based premiums

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