Question

why and how do governments intervene in insurance markets

Answer 1

Answer:

governments intervene in insurance markets:

Government may intervene in any insurance market by addressing that is providing solutions to these following three problems associated with the markets:

• Adverse selection,
• Moral hazard, and
• Incomplete markets.

Reason why governments intervene in insurance markets is:

The government intervene in insurance market because of various reasons.

1.One is some times private insurance company may not give the valuation of insurance products as it should give and sometimes they do not give the valuation of insurance in such a way as it should give.

2.Second the government force or make rules and regulations to reveal and disclose about different insurance products and their prices.

This helps to know about the different insurance to government and public.

3.Third is they try to regulate the insurance market.

Any company of the insurance market are controlled by the regulatory body.