A car insurance company is considering issuing a new policy to cover damages caused by elderly drivers. The company needs to keep premiums low to attract customers, but this might cause the company to lose money as it may mean that the income generated by the premiums will not be sufficient to cover the damages caused by older drivers.
Which of the following strategies will most likely lower the company’s worries?
A. Insuring drivers that are at a younger age and are unlikely to submit claims for several years
B. Insuring only people with a solid driving background and no previous accidents
C. Insuring drivers with sufficient income to cover the damages
D. Insuring only drivers rejected by other companies’ policies
E. Including more categories of damages in the policy than in most older-driver policies
To lower the damages caused by insuring old drivers (who are more likely to get involved in accidents) while keeping the premium low, we need to generate more income from other insurers.
A--this could be one way to generate income since the drivers won't be submitting a claim for several years
B--there is no guarantee that these driver won't be involved in any future accidents
C--Even if the company did this, there is no indication of the number of such drivers & the income generated by the premiums they pay
D--This is likely to further increase the companies worries since these cases were rejected by other co's may be because they were more risky
E--This will add to the already existing common damage categories without giving any method to increase the co's income.
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