GMAT Question of the Day - Daily to your Mailbox; hard ones only

It is currently 16 Jul 2018, 03:58

Close

GMAT Club Daily Prep

Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track
Your Progress

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.

Close

Request Expert Reply

Confirm Cancel

QOTD: Pro-Tect Insurance Company has recently been

  new topic post reply Question banks Downloads My Bookmarks Reviews Important topics  
Author Message
TAGS:

Hide Tags

Expert Post
1 KUDOS received
MBA Section Director
User avatar
V
Joined: 19 Mar 2012
Posts: 5137
Location: India
GMAT 1: 760 Q50 V42
GPA: 3.8
WE: Marketing (Non-Profit and Government)
QOTD: Pro-Tect Insurance Company has recently been [#permalink]

Show Tags

New post 07 Sep 2017, 12:56
1
8
00:00
A
B
C
D
E

Difficulty:

  25% (medium)

Question Stats:

76% (01:30) correct 24% (01:56) wrong based on 492 sessions

HideShow timer Statistics

Verbal Question of The Day: Day 99: Critical Reasoning


Subscribe to GMAT Question of the Day: E-mail | RSS
For All QOTD Questions Click Here


Pro-Tect Insurance Company has recently been paying out more on car-theft claims than it expected. Cars with special antitheft devices or alarm systems are much less likely to be stolen than are other cars. Consequently Pro-Tect, as part of an effort to reduce its annual payouts, will offer a discount to holders of car-theft policies if their cars have anti-theft devices or alarm systems.

Which of the following, if true, provides the strongest indication that the plan is likely to achieve its goal?

(A) The decrease in the risk of car theft conferred by having a car alarm is greatest when only a few cars have such alarms.
(B) The number of policyholders who have filed a claim in the past year is higher for Pro-Tect than for other insurance companies.
(C) In one or two years, the discount that Pro-Tect is offering will amount to more than the cost of buying certain highly effective antitheft devices.
(D) Currently, Pro-Tect cannot legally raise the premiums it charges for a given amount of insurance against car theft.
(E) The amount Pro-Tect has been paying out on car theft claims has been greater for some models of car than for others.

Every question of the day will be followed by an expert reply by GMATNinja in 12-15 hours. Stay tuned! Post your answers and explanations to earn kudos.

_________________

Have an MBA application Question? ASK ME ANYTHING!

My Stuff: Four Years to 760 | MBA Trends for Indian Applicants

My GMAT Resources
V30-V40: How to do it! | GMATPrep SC | GMATPrep CR | GMATPrep RC | Critical Reasoning Megathread | CR: Numbers and Statistics | CR: Weaken | CR: Strengthen | CR: Assumption | SC: Modifier | SC: Meaning | SC: SV Agreement | RC: Primary Purpose | PS/DS: Numbers and Inequalities | PS/DS: Combinatorics and Coordinates

My MBA Resources
Everything about the MBA Application | Over-Represented MBA woes | Fit Vs Rankings | Low GPA: What you can do | Letter of Recommendation: The Guide | Indian B Schools accepting GMAT score | Why MBA?

My Reviews
Veritas Prep Live Online

Expert Post
2 KUDOS received
GMAT Club Verbal Expert
User avatar
P
Status: GMAT and GRE tutor
Joined: 13 Aug 2009
Posts: 1821
Location: United States
GMAT 1: 780 Q51 V46
GMAT 2: 800 Q51 V51
GRE 1: 340 Q170 V170
Re: QOTD: Pro-Tect Insurance Company has recently been [#permalink]

Show Tags

New post 07 Sep 2017, 12:58
2
2
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?

Quote:
(A) The decrease in the risk of car theft conferred by having a car alarm is greatest when only a few cars have such alarms.

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).

Quote:
(B) The number of policyholders who have filed a claim in the past year is higher for Pro-Tect than for other insurance companies.

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.

Quote:
(C) In one or two years, the discount that Pro-Tect is offering will amount to more than the cost of buying certain highly effective anti-theft devices.

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).

Quote:
(D) Currently, Pro-Tect cannot legally raise the premiums it charges for a given amount of insurance against car theft.

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.

Quote:
(E) The amount Pro-Tect has been paying out on cartheft claims has been greater for some models of car than for others.

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.
_________________

GMAT Club Verbal Expert | GMAT/GRE tutor @ www.gmatninja.com (Now hiring!) | GMAT blog | Food blog | Notoriously bad at PMs

Beginners' guides to GMAT verbal
Reading Comprehension | Critical Reasoning | Sentence Correction

YouTube LIVE verbal webinars
Series 1: Fundamentals of SC & CR | Series 2: Developing a Winning GMAT Mindset

SC & CR Questions of the Day (QOTDs), featuring expert explanations
All QOTDs | Subscribe via email | RSS

Need an expert reply?
Hit the request verbal experts' reply button -- and please be specific about your question. Feel free to tag @GMATNinja and @GMATNinjaTwo in your post. Priority is always given to official GMAT questions.

Sentence Correction articles & resources
How to go from great (760) to incredible (780) on GMAT SC | That "-ing" Word Probably Isn't a Verb | That "-ed" Word Might Not Be a Verb, Either | No-BS Guide to GMAT Idioms | "Being" is not the enemy | WTF is "that" doing in my sentence?

Reading Comprehension, Critical Reasoning, and other articles & resources
All GMAT Ninja articles on GMAT Club | Using LSAT for GMAT CR & RC |7 reasons why your actual GMAT scores don't match your practice test scores | How to get 4 additional "fake" GMAT Prep tests for $29.99 | Time management on verbal

Intern
Intern
avatar
B
Joined: 19 Jan 2014
Posts: 36
Schools: Melbourne '20
GMAT 1: 670 Q45 V37
Re: QOTD: Pro-Tect Insurance Company has recently been [#permalink]

Show Tags

New post Updated on: 07 Sep 2017, 19:44
C. The amount of discount exceeds the amount invested on anti-theft devices in one or two years. This will ensure that the insurance holders with anti-theft devices installed are profited and are provided with an incentive to buy the anti-theft devices. Thus, the insurance company plan will work.

Posted from my mobile device

Originally posted by suryaaparna on 07 Sep 2017, 15:06.
Last edited by suryaaparna on 07 Sep 2017, 19:44, edited 1 time in total.
Intern
Intern
avatar
B
Joined: 06 Apr 2016
Posts: 24
GMAT 1: 540 Q42 V23
Re: QOTD: Pro-Tect Insurance Company has recently been [#permalink]

Show Tags

New post 07 Sep 2017, 18:54
I think the answer should be Option A as it talks about the profit of insurance company .

Posted from my mobile device
Manager
Manager
avatar
B
Joined: 27 Jun 2015
Posts: 66
WE: Information Technology (Computer Software)
GMAT ToolKit User
Re: QOTD: Pro-Tect Insurance Company has recently been [#permalink]

Show Tags

New post 07 Sep 2017, 19:41
IMO its C because, if the discount amount is going to be more than the cost of anti theft system, people will buy the anti theft system.
Intern
Intern
avatar
B
Joined: 18 Mar 2015
Posts: 15
Re: QOTD: Pro-Tect Insurance Company has recently been [#permalink]

Show Tags

New post 07 Sep 2017, 20:31
Conclusion :Consequently Pro-Tect, as part of an effort to reduce its annual payouts, will offer a discount to holders of car-theft policies if their cars have anti-theft devices or alarm systems.
Ans:C

B: No one is concerned about other policy makers
C:If the discount is more then the customers will have incentive to buy the anti theft devices.
D: Nothing to do with premium
E: Not to do with model of cars
Study Buddy Forum Moderator
User avatar
D
Joined: 04 Sep 2016
Posts: 1087
Location: India
WE: Engineering (Other)
Premium Member CAT Tests
QOTD: Pro-Tect Insurance Company has recently been [#permalink]

Show Tags

New post 10 May 2018, 09:34
GMATNinja VeritasPrepKarishma

Quote:
(A) The decrease in the risk of car theft conferred by having a car alarm is greatest when only a few cars have such alarms.


Do you agree that (A) is a correct weakener choice for the plan to fail ?
_________________

It's the journey that brings us happiness not the destination.

Expert Post
1 KUDOS received
GMAT Club Legend
GMAT Club Legend
User avatar
P
Joined: 16 Oct 2010
Posts: 8121
Location: Pune, India
Re: QOTD: Pro-Tect Insurance Company has recently been [#permalink]

Show Tags

New post 10 May 2018, 23:04
1
adkikani wrote:
GMATNinja VeritasPrepKarishma

Quote:
(A) The decrease in the risk of car theft conferred by having a car alarm is greatest when only a few cars have such alarms.


Do you agree that (A) is a correct weakener choice for the plan to fail ?


I wouldn't say so. "a few cars" is a very vague term. What if market share of Pro-tect is only 1% of all cars? Then even if all clients of Pro-tect get anti theft alarms, they should be "a few" and hence the anti-theft device should be effective.
_________________

Karishma
Private Tutor for GMAT
Contact: bansal.karishma@gmail.com

Senior Manager
Senior Manager
User avatar
P
Joined: 12 Feb 2015
Posts: 319
Premium Member CAT Tests
QOTD: Pro-Tect Insurance Company has recently been [#permalink]

Show Tags

New post 01 Jun 2018, 02:54
Pretty straightforward!

From customers point of view if he is paying a premium of $100 and only getting a car insurance vis-a-vis he paying $ 90 and getting the same car insurance which he was getting in $100 plus one of the best anti theft device for FREE then surely the customer will choose an option which gives him more by paying something less for the same thing plus an extra free bee.

Option C does capture this reasoning beautifully!! :)
_________________

"Please hit :thumbup: +1 Kudos if you like this post" :student_man:

_________________
Manish :geek:

"Only I can change my life. No one can do it for me"

QOTD: Pro-Tect Insurance Company has recently been   [#permalink] 01 Jun 2018, 02:54
Display posts from previous: Sort by

QOTD: Pro-Tect Insurance Company has recently been

  new topic post reply Question banks Downloads My Bookmarks Reviews Important topics  

Events & Promotions

PREV
NEXT


GMAT Club MBA Forum Home| About| Terms and Conditions and Privacy Policy| GMAT Club Rules| Contact| Sitemap

Powered by phpBB © phpBB Group | Emoji artwork provided by EmojiOne

Kindly note that the GMAT® test is a registered trademark of the Graduate Management Admission Council®, and this site has neither been reviewed nor endorsed by GMAC®.