Arkansas Insurance Adjuster Practice Exam

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Prepare for the Arkansas Insurance Adjuster Exam with flashcards and multiple choice questions, each offering hints and explanations. Equip yourself for your test confidently!

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Why do residual market insurance programs exist?

  1. To provide cut-rate policies for low-income consumers

  2. Because high-risk consumers need more coverage

  3. To offer simple coverages for high-risk consumers

  4. No private insurer wants to issue high-risk policies

The correct answer is: No private insurer wants to issue high-risk policies

Residual market insurance programs exist because no private insurer wants to issue high-risk policies. These policies are high-risk because they cover consumers who are more likely to experience unexpected or costly events, and thus private insurance companies do not want to bear the financial risk associated with these policies. This is why residual market insurance programs are necessary, as they provide a safety net for high-risk consumers who might otherwise struggle to find coverage. Options A, B, and C are incorrect because they all provide reasons for residual market insurance programs that do not fully capture the purpose and function of such programs.

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