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The reason that higher premium loadings generally lead to lower demand for insurance coverage is that:...

  1. The reason that higher premium loadings generally lead to lower demand for insurance coverage is that:
    1. The fair premium become too large relative to the expected cost of not purchasing insurance
    2. People don’t like insurers to make too much profit
    3. Exposures with low severity always have high administrative costs
    4. Exposures with high frequency are less likely to be insurance.

Solutions

Expert Solution

Ans a. The fair premium become too large relative to the expected cost of not purchasing insurance.

The reason that higher premium loadings generally lead to lower demand for insurance coverage is that the fair premium become too large relative to the expected cost of not purchasing insurance

jeff jeffy answered 2 years ago
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