an indication that insurance companies anticipate adverse selection is (a) they do not require a co-pay...

an indication that insurance companies anticipate adverse selection is (a) they do not require a co-pay (b) they classify clients into different risk types according to pre-existing conditions (c) they do not require a deductible (d) the do not classify clients into different risk types according to thier claim history.

Expert Solution

option B

because of adverse selection problem , insurance companies are not able to distinguish between clients of good and bad health . The pre-existing conditions allow the companies to distinguish clients into various categories depending on their medical health allowing the companies to charge premium accordingly .

Rahul Sunny answered 2 years ago

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