Which program is an example of government-subsidized losses?

Which program is an example of government-subsidized losses?

• A. Flood insurance
• B. Private travel insurance
• C. Private reinsurance
• D. Dental insurance

Answer: (A)

Government-subsidized losses happen when the government helps cover part of the cost of insurance or claims, reducing the price for policyholders and shifting some risk to the public fisc. Flood insurance fits this: the National Flood Insurance Program provides subsidized premiums for many flood-prone properties, so actual losses are partly funded by government support rather than purely by private premiums. The other options are typically priced and managed privately, with premiums reflecting expected losses and risk, not government subsidy. So flood insurance is the example of government-subsidized losses.

Government-subsidized losses happen when the government helps cover part of the cost of insurance or claims, reducing the price for policyholders and shifting some risk to the public fisc. Flood insurance fits this: the National Flood Insurance Program provides subsidized premiums for many flood-prone properties, so actual losses are partly funded by government support rather than purely by private premiums. The other options are typically priced and managed privately, with premiums reflecting expected losses and risk, not government subsidy. So flood insurance is the example of government-subsidized losses.