III IC-45 Practice Questions - III IC-45 General Insurance Underwriting Exam

What is a major consequence of 'adverse selection' in general insurance?

There is no impact on the insurer's profitability The insurer's loss ratio will likely increase as high-risk individuals are more prone to buy insurance Insurers end up with a portfolio of better-than-average risks The regulator will mandate a decrease in premiums

Correct Answer:

The insurer's loss ratio will likely increase as high-risk individuals are more prone to buy insurance

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