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In: Finance
Insurance companies charge young male drivers much higher rates until they get to be 25. Discuss...
Insurance companies charge young male drivers much higher rates until they get to be 25. Discuss your understanding why that should or should not be the case!
Solutions
Expert Solution
In my view the companies are right in their approach. Young male drivers are aggressive and at times irresponsible. They are more prone to accidents than matured drivers. Also they are not experienced enough to handle the threats faced by drivers as compared to older drivers. Hence they need to be charged higehr rates to cover the higher risk of insurance companies.
jeff jeffy answered 2 years agoRelated Solutions
Insurance companies charge young male drivers much higher rates until they get to be 25. Discuss...
Insurance companies charge young male drivers much higher rates
until they get to be 25. Discuss you understanding why that should
or should not be the case!
Insurance companies charge higher premiums for people who smoke. Should they be allowed to charge higher...
Insurance companies charge higher premiums for people who smoke.
Should they be allowed to charge higher premiums based on people's
weight (i.e., obese, overweight). Do you think this would be
effective in getting people to reduce their BMI or change their
diet.
Do you consider it to be unethical for insurance companies to charge high-risk people a higher...
Do you consider it to be unethical for insurance companies to
charge high-risk people a higher premium than low-risk people?
Life insurance companies usually charge a higher premium to smokers than non-smokers. Given this, what is...
Life insurance companies usually charge a higher premium to
smokers than non-smokers. Given this, what is the potential for
adverse selection and moral hazard in the process of new
applicants? How can the company reduce or eliminate those
problems?
Most credit cards charge a relatively high rate of interest, yet
low-risk borrowers carry them. The adverse selection concept says
that low-risk borrowers should be discouraged from credit cards.
Why is this not the case?
Your friend maintains a very high...
Automobile insurance companies require drivers they insure have a valid drivers’ license and will not pay...
Automobile insurance companies require drivers they insure have
a valid drivers’ license and will not pay 100% of damage claims.
Explain why.
8. An insurance agent theorizes that the fraction of uninsured drivers is higher in states with...
8. An insurance agent theorizes that the fraction of uninsured
drivers is higher in states with no-fault auto insurance (e.g.
Michigan) than in states with tort auto insurance (e.g. Wisconsin).
To test this theory she samples 150 drivers from Michigan and 125
drivers from Wisconsin and finds that 42 and 23 are uninsured in
the two samples, respectively. Let Michigan drivers be population 1
and Wisconsin drivers be population 2.
a. Set up the null and alternative hypotheses to test...
The premiums insurance companies charge to members of a group insurance plan are tied to the...
The premiums insurance companies charge to members of a group
insurance plan are tied to the historical losses experienced by the
members of the plan.
Select one:
a. true
b. false
A large car insurance company is conducting a study of accidents for male and female drivers.
A large car insurance company is conducting a study of accidents
for male and female drivers. They want to know if on average male
drivers (who tend to be thought of as more aggressive drivers) have
more accidents than female drivers. Data on the number of accidents
in the past 5 years is collected for randomly selected drivers who
are insured by this company. An analysis of the results produced
the following summary statistics.Group Statistics NMeanStd DeviationStd Error MeanMale322.191.710.3026Female311.231.380.2482Using α=0.01, do...
Why do insurance companies charge different rates based on age, sex, marital status, where people live,
Why do insurance companies charge different rates based on
age, sex, marital status, where people live, how much they drive,
whether they smoke, driving record, etc?
1) Why do insurance companies charge different rates based on age, sex, marital status, where people...
1) Why do insurance companies charge different rates based on
age, sex, marital status, where people live, how much they drive,
whether they smoke, driving record, etc?
2) Asymmetric information and how to deal with it?
3) Why is price discrimination more prevalent for services than
goods?
Need help with these 3 homework questions.
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