Question

discuss the fairness of these approaches to both the insurance companies as well as society.

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10. Here are some important social issues and that are dealt with in subsidization
a) AIDS (Acquired Immune Deficiency Syndrome) – who should pay for the costs of this virus? How should the cost be shared or spread?
b) Automobile insurance – a social right to drive the automobile so should costs be subsidized for people who have poor driving records or cannot afford the coverage?

Question: In each of these important social issues, what discuss the fairest approach insurers can deal with subsidizing high-risk groups in a risk pool. Also discuss the fairness of these approaches to both the insurance companies as well as society.

Answer 1

AIDS is caused due to no proper or no usage of protection (condoms) while having intercourse, syrenges not properly used, using second hand injection in surgery by doctor and such other reasons. These are some activities where carelessness would be more probable if people are not educated and made aware of virus, properly. Hence, the cost of this shall be mostly shared by society as it is a fault on their end. Insurers, in this case, would help and share some of the costs of treatment, but the risk will not be too high.

A car accident is caused in situations such as Drink and driving, and also due to carelessness of any driving person. The poor driving records and unable to afford the coverage shows that the probability of accident is much high. The cost of treatment shall be borne by society. Insurer may charge high premium for such clients since the risk involved is too high.