Which of the following is likely to occur if lawsuits involving Property and Casualty insurance and amounts awarded rise dramatically?
A)Insurance companies leave premiums unchanged
B)Insurance companies would raise premiums
C)Insurance companies hold less liquid assets to earn more income
D)Insurance companies keep insurance rates low

Question

Quizplus · Accepted Answer

If the lawsuits involving Property and Casualty insurance and the amounts awarded rise dramatically, insurance companies would likely have to raise premiums to offset the increased costs of claims. This would help ensure that they can continue to pay out claims without becoming insolvent. Keeping premiums unchanged or keeping insurance rates low may not be sustainable in this scenario, as it could lead to a lack of funds to cover claims. Holding less liquid assets to earn more income could be a potential strategy, but it may not be sufficient to cover the increased costs of claims.

Which of the Following Is Likely to Occur If Lawsuits