Question

Which of these best describes risk pooling? 1-Insurance companies must avoid situations whereby customers are incentivized to intentionally cause an incident (e.g. burning their house down) 2-Sick people are more likely to sign up for health insurance, and healthy people will not purchase the policy because this will make the premium more expensive. 3-If individual events are independent, risk can be decreased by averaging across all of the events 4-If individual events are not independent, risk can be decreased by averaging across all of the events

Answer 1

Explanation:

The pooling of risk is fundamental to the concept of insurance. A health insurance risk pool is a group of individuals whose medical costs are combined to calculate premiums. Pooling risks

together allows the higher costs of the less healthy to be offset by the relatively lower costs of the healthy, either in a plan overall or within a premium rating category. In general, the larger the risk pool, the more predictable and stable the premiums can be.

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Answer 2

Answer:

2.sicj people are mostly