If governments make it compulsory to avail insurance protection, it is because:

CA Foundation · Business Economics · MTP · May 2026
If governments make it compulsory to avail insurance protection, it is because:
(A) A. Insurance companies need to be running profitably
(B) B. Insurance will generate moral hazard and adverse selection
(C) C. Insurance is a merit good and government want people to consume it
(D) D. None of the above

Suggested Answer and Working Notes:

Correct Answer: Option (C)

C. Insurance is a merit good and government want people to consume it

Topics: Public Finance

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