Pro-Tect Insurance Company has recently been paying out more on car-th

The question stem itself asks us to evaluate Pro-Tect's plan, so let's make sure that we're 100% clear about the language of that plan. The plan is to "offer a discount to holders of car-theft policies if their cars have anti-theft devices or alarm systems." The goal of this plan is "to reduce [Pro-Tect's] annual payouts [on car theft claims]."

"Cars with special anti-theft devices or alarm systems are much less likely to be stolen than are other cars." Pro-Tect wants its policy-holders to install anti-theft devices or alarm systems (if they don't already have such devices/systems) in order to decrease the likelihood that those policy-holders will have their cars stolen. This, in turn, should reduce car theft claims and, thus, reduce Pro-Tect's annual payouts on car theft claims.

So, which of the answer choices provides the strongest indication that the plan is likely to achieve its goal of reducing Pro-Tect's annual payouts?


This statement suggests that the effectiveness of car alarms actually DECREASES as the number of cars equipped with such alarms increases. Thus, even if the discount encourages some of Pro-Tect's customers to install car alarms, the security benefit of installing such an alarm might decrease with each successive installation. This statement doesn't suggest that Pro-Tect's plan will fail, but it certainly doesn't provide a strong indication that the plan will succeed. Eliminate (A).


We are not interested in comparing Pro-Tect to other insurance companies. We only want to know whether the discount is likely to reduce annual payments on car theft claims. Choice (B) does not provide a strong indication either way and can be eliminated.


In order for Pro-Tect's plan to work, at least some of the policy-holders who currently do not have an anti-theft device or alarm system must decide to install such a device or system because of the discount. If the cost of anti-theft devices is very high relative to the size of the discount, the discount might not be enough to encourage policy-holders to buy such devices. Choice (C) tells us that the devices would "pay for themselves" after only a year or two and, thus, that customers who install such devices will save money each successive year. The fact that customers would have a financial incentive to install such devices provides a strong indication that the plan will achieve its goal. Keep choice (C).


We want to know whether the proposed discount is likely to reduce annual payments on car theft claims, and this has nothing to do with the cost of insurance premiums. Choice (D) is irrelevant and can be eliminated.


The proposed plan has nothing to do with car models. Choice (E) does not suggest whether the plan will achieve its goal, so (E) can be eliminated.

Choice (C) is the best answer.