Explanation:
To help protect against the moral hazard issue, insurance companies use deductibles, policy limits, and coinsurance provisions.
(Book 4, Module 53.3, LO 53.j)
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Question 48
In using insurance to mitigate operational risks, the moral hazard risk may arise. To protect against moral hazard risk, insurance companies are least likely to use which of the following mechanisms?
A
Coinsurance provisions.
B
Deductibles.
C
Policy limits.
D
Rate increases.
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