MCS 3040 Lecture 28: Chapter 28

• School: University of Guelph
• Department: Marketing and Consumer Studies
• Course: MCS 3040
• Professor: Joe Radocchia

Document Summary

Limitations of insurance: can be costly and is not always available. Insurance does not prevent a loss from occurring. Insurance does not prevent the potential adverse publicity associated with a loss. A deductible is that part of a loss for which the insured is responsible. The purpose of an insurance contract is to shift the risk of various kinds of losses to an insurance company. Duty to disclose obligation of the insured to provide to the insurer all information that related to the risk being insured. Are there any concerns with the two-tiered approach: the problem with not requiring disclosure of genetic information or an outright ban on insurance companies using genetic information in insurance decisions is one of adverse selection. With knowledge of negative genetic information, people who are not required to disclose this information to insurers may obtain more insurance in larger amounts. This result undermines the risk assessment (insurance decisions are made without all the material information).