Theon borrowed money from a bank to purchase a fishing boat after being inspired by tales of adventure or something. He purchased property insurance on the boat. Theon had difficulty making loan payments because he did not catch many fish, and fish prices were low. Fortunately for Theon, his boat accidentally sunk during a storm and was able to collect enough from his insurer to pay off his remaining loan balance.
From the perspective of the insurer, this loss best illustrates
Option A
systemic risk.
Option B
legal hazard.
Option C
attitudinal hazard.
Option D
diversifiable risk
Option E
adverse selection.