Actual insurance premiums charged by insurance companies may exceed the actuarially fair rates because:

A) the insurance companies have monopoly rights issued by state regulators.
B) the insurance companies are risk averse.
C) there are administrative costs and other expenses that must be covered by the premia.
D) insurance companies tend to over-state the risks they face.

Insurance companies have to charge premiums not only to cover the expected losses but also to cover the administrative costs and other expenses associated with providing insurance. These expenses include the cost of processing claims, underwriting, marketing, and maintaining reserves. Therefore, the actual premiums charged are likely to exceed the actuarially fair rates. Choices A, B, and D are not accurate as they do not represent the main reason for the higher insurance premiums.