To overcome the adverse selection problem, insurers seek to impose higher premiums on higher risks. This is however not always possible. In this instance, effectively, the outcome is that ...

Select one or more:

a.

Insurers, unable to distinguish good risks from bad risks, will cease writing insurance policies.

b.

The 'bad insureds' bear the cost of 'good insureds' being selected.

c.

Insurers will need to factor this in and insurance premiums will, in equilibrium, be higher for all policy holders.

d.

The 'good insureds' bear the cost of 'bad insureds' being selected.