ABSTRACT
Should private insurers be entirely free to decide what risks to take on, and free also to set high premiums for high risks? Other things being equal, the answer is ‘Yes’. If all applications for insurance had to be approved no-questions-asked, or if high-risk applicants had to be treated the same as everyone else, payments to cover losses might quickly bankrupt firms, or keep them in business only by burdening the low-risk with unreasonably high charges. The survival of firms and the affordability of cover for the low or average risk could be threatened if the freedom to underwrite were taken away or significantly curtailed. But to say that the freedom to underwrite should normally be respected is not to say that it is absolute. It may be overridden or restricted, because it can conflict with goods that are more important than efficient insurance markets. This chapter is concerned with the limits of the freedom to underwrite, but it also has to do with the moral differences between different kinds of insurance, and with the very great moral risks associated with restricting access to medical insurance.
