Final answer:
The field underwriter aids insurers in reducing adverse selection by collecting essential data from applicants, leading to more informed decisions and appropriate coverage.
Explanation:
The agent, also known as the 'field underwriter,' plays a crucial role in gathering information for the insurer to assess risks and make informed decisions. By collecting relevant data about potential policyholders, the agent helps the insurer in reducing adverse selection and determining appropriate premiums and coverage.
Insurance companies utilize screening techniques, such as analyzing past insurance claims and verifying information provided by applicants, to mitigate risks and ensure the accuracy of the information provided before issuing policies.
Financial intermediaries also contribute by creating information through various methods, such as conducting background checks and obtaining credit reports, to assess the creditworthiness of applicants and minimize asymmetric information in the insurance market.
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