b9n920 wrote:
Nationside, an insurance company, is considering issuing a new policy to insure automobile drivers who are elderly and have a record of car accidents. If premiums for the new policy are inappropriately high for a potential customer, that customer will not opt for the new policy. Therefore, Nationside is concerned that the income from the policies would not be sufficient to pay for the claims that would be made.
Which of the following strategies would be most likely to maximize Nationside's profits from the new policy?
Premise: New policy for elderly drivers who have a record of accidents.— potential customers
High premiums— will not opt— concern for revenue less than claims.
Aim: to maximise profits from the new policy
Prethinking: profit = total premium - claims
So we need to look for an option that will have less claims.
A. Marketing the new policy to older drivers with a history of automobile accidents of any type—incorrect, since they still will have to pay for claims
B. Marketing the new policy to older drivers with a history of minor automobile accidents only— if the accidents are minor, claims will be less. Correct
C. Marketing the new policy to younger drivers with no history of automobile accidents—not for younger drivers, irrelevant
D. Marketing the new policy to younger drivers with some history of automobile accidents— irrelevant
E. Marketing the new policy to older drivers who were rejected by other companies for similar policies—they are already a trouble. Incorrect
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