In one year 2, 100 malpractice claims were filed with insurance compan

Answer: Option E

Solution

No. of claims: 2100
Resulting in Financial settlements: (1/4) * 2100 = 525

Question: Average of settled claims less than 400,000?
Values needed: Number of those claims and the total sum of those claims

Options:
(1) Company X paid a total of 24.5 million dollars to the claimants.
=> Insufficient. No info on how much for less than 400, 000$ claims and how much for other

(2) Only 5 claims resulted in payments of $400,000 or more.
=> Insufficient. Less than 400,000 $ claims are (525 - 5) = 520 but no info on total amount with these claims.

Options (1) & (2):
=> Insufficient. By combining as well, we don't have any information on what is the total value of settlements claims less
than 400,000 $.

2,100 malpractice claims were filed

\(2,100(0.25) = 525 \) claims resulted in a financial settlement

Of the 525 claims that resulted in a settlement of < $400,000, what was the average?

We need to know the number of claims under $400,000 and the the total amount paid out by Company X for claims less than $400,000.

(1) We don't know how what portion is from the settlements under $400,000. INSUFFICIENT.

(2) Clearly insufficient.

(1&2) Combined, we're told 2,100 claims were filed and only 5 claims resulted in payments of over $400,000.

However, we don't know the value of those 5 claims. Those 5 claims could each be $4 million dollars or they could be $400,000. INSUFFICIENT.

Answer is E.
_________________

We are looking for (1) the number of claims for the claims that resulted in payments of less than $400,000, and (2) the total amount of payments that resulted from all claims in payments of $400,000 or less.

For now, we only know there are 100 / 4 = 25 claims in total.

Statement 1:

This doesn't tell us either (1) or (2), for (2) we want the claims under $400,000 specifically. Insufficient.

Statement 2:

We know there are 20 claims under $400,000 which is (1), we still need to know (2). Insufficient.

Combined:

Still don't know (2) so insufficient.

Ans: E
_________________

Hello from the GMAT Club BumpBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email.
_________________