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Insurance Policies. Name: Institution: Tutor: Subject: Date: Part II: Income protection Insurance (IPI) Question one. Information asymmetry has been elaborated as the circumstances in which one party of a contract or a deal possesses more information than the other party…
A further analysis in the case study reveals that Mr. Farid does not deny the answers he gave. He had stated he is the Manager and added that his work entailed inspection of construction sites and training of workers. With this information, the insurer still went ahead to insure him under non-manual work. A look at his medical health reveals a heart disorder which puts Mr. Farid at more risky state of leaving his employment. This analysis reflects on asymmetric information where full disclosure of the duties undertaken by Mr. Farid is not given. This led to adverse selection of Mr. Farid because the heart disorder deteriorated leading to employment forfeiture (Amy, 2007). The outdoor activities were the majority of tasks that Mr. Farid did. Prudent Insurance Inc. would not have given the income policy to Mr. Farid had the information about his activities been clearly outlined. Question 2 As an underwriter, I would not approve the claim from Mr. Farid. This is because the insurer should have assessed the kind of work Mr. Farid undertook on a daily basis of which he forfeited to do. A risk assessment would reveal his work jeopardizes his health condition further let alone the construction inspectorate job. There was very high risk of Mr. Farid losing his job based on his health. Mr. ...
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