XYZ is a US university with 60% of students coming from overseas. In light of the increasingly tightened government student visa granting policy, the university finance office is worried about the potential drop in the number of overseas students, and wanted to hedge such risk. XYZ university was informed by the insurance broker AEON that CHUBBA Insurance is interested in launching an insurance product to cover the drop in university income and meet the emerging market demand.

a) What features of the tuition income insurance make it a less desirable insurance product? List at least three reasons

b) If you are an advisor to CHUBBA Insurance, please suggest how CHUBBA Insurance should manage the risks associated with underwriting the tuition income business.