Why can index insurance effectively avoid moral hazard and adverse selection?

Because weather index insurance overcomes the problem of information asymmetry, index insurance can effectively avoid moral hazard and adverse selection.

Weather index insurance overcomes the problem of information asymmetry, which is conducive to reducing adverse selection and preventing moral hazard. The root of adverse selection and moral hazard is often information asymmetry.

Strict and standardized salary standards have greatly solved the problem of information asymmetry, and then solved the problems of adverse selection and moral hazard.