Explain how the idea of snap shot works to lower the driver

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Question: In this chapter, we discussed the economic underpinnings of private health insurance based on the concepts of uncertainty, expected medical spending, and the risk pool. Now, let's apply those concepts to understand another type of insurance that we frequently purchase-car insurance.

View the Progressive Car Commercial on Rate Suckers.

Apply the basic concepts of health insurance (risk, uncertainty, expected spending, asymmetric information, and premiums or rates) to car insurance. Use the concepts to explain why the driver's rate goes up when her or his friend is a bad driver? Explain how the idea of Snap Shot works to lower the driver's rate.

Reference no: EM133428550

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