Consultant: Since the appointment of its new CEO last year, profits at

Question

Consultant: Since the appointment of its new CEO last year, profits at Brakeland Insurance Company have declined. While accident claims involving privately owned cars have increased, along with the associated increase in cost in time for Brakeland employees who have to interact with all the different customers with claims, these increases are not primarily responsible for driving down profits. Instead, the decline in profits is primarily due to the inefficient corporate structure at Brakeland, with costly duplication of roles in customer service. After all, Sterling Auto Insurance Company has seen a similar increase in accidents among its insured vehicles, but while Brakeland's profits have decreased, Sterling's have increased in the same time period. Moreover, Sterling has a somewhat smaller customer service team than Brakeland has.

Which of the following most weakens the consultant’s argument?

A. In the insurance field, an individual customer service representative, on average, tends to get paid substantially less than an individual actuary who determines insurance rates.

B. Sterling’s customer-service approval ratings have always been higher than Brakeland’s, and the difference has increased over the past year.

C. In many industries, downsizing the workforce to eliminate clear duplication of roles is a guaranteed way to increase profits.

D. Individual policies traditionally account for the majority of Brakeland's profits, while large corporate policies have accounted for the majority of Sterling's.

E. Brakeland's new CEO has instituted a policy of hands-on management with the intention of ensuring that senior members of staff are aware of all company problems.

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Abhiswarup · Answer

D should be the answer.

The passage claims that Brakeland's profit is way less than sterling's profit and same is due to inefficient corporate structure. To substantiate claim author says Sterling has seen increases accidents cases similar to Brakeland but Sterling's have made huge profit. The sterling have smaller customer service team and Brakeland has larger customer service team with duplication of roles in customer service.

Lets analyze the options:
A. In the insurance field, an individual customer service representative, on average, tends to get paid substantially less than an individual actuary who determines insurance rates. Irrelevant the option is nowhere connected. Eliminate.

B. Sterling’s customer-service approval ratings have always been higher than Brakeland’s, and the difference has increased over the past year. Approval rating was always higher is a fact which was always present but it can't establish that profit is not linked with inefficient corporate structure. Eliminate.

C. In many industries, downsizing the workforce to eliminate clear duplication of roles is a guaranteed way to increase profits. This strengthens the argument. Eliminate.

D. Individual policies traditionally account for the majority of Brakeland's profits, while large corporate policies have accounted for the majority of Sterling's. The statements gives reason for profit as corporate policies which is not the case for Brakeland's. Thus contributing to the higher profit of sterling

E. Brakeland's new CEO has instituted a policy of hands-on management with the intention of ensuring that senior members of staff are aware of all company problems. Factual information. Eliminate

Correct answer should be D.

Dereno · Answer

The consultant begins with the statement saying that : Brakeland insurance company (BLIC) has been appointed by a new ceo, and the profits have declined.

Accident claims for private cars are increasing- with the time to interact with the customers have increased too. But, this is not the reason for profit decline.

The consultant furthers adds saying -  Inefficient corporate structure as reason for BLIC’s profit decline, with duplication of roles as a reason too.

If we need to weaken the consultant statements -

Firstly, we need to prove Corporate structure is not inefficient. Secondly, some other factor might have caused profit decline.

Let’s see the options .

A.  In the insurance field , an individual customer service representative, on average, tends to get paid substantially less than an individual actuary who determines insurance rates.

This is a generalised statement, even though the comparison is between BLIC and sterling’s. Hence, out of scope. Where the employees of BLICs paid lesser than Sterling’s ??.

B. Sterling’s customer-service approval ratings have always been higher than Brakeland’s, and the difference has increased over the past year.

This strenghtens or  supports  the consultant's argument. It suggests Brakeland's customer service might be less effective, potentially justifying the idea of inefficiency. Hence, eeliminated.

C.  In many industries , downsizing the workforce to eliminate clear duplication of roles is a guaranteed way to increase profits.

Another generalised statement, Hence out of scope.

D.  Individual policies traditionally account for the majority of Brakeland's profits, while large corporate policies have accounted for the majority of Sterling's.

This shows the flawed comparison made by consultant between two entities which follow a different model of business. May be the policies could have been the reason for profit decline even though the private claims have shown an increasing trend. Hence  option D

E. Brakeland's new CEO has instituted a policy of hands-on management with the intention of ensuring that senior members of staff are aware of all company problems.

If senior members the problems at lower levels, coordination or communication will be effective. More over, it’s a management style of this new ceo. The results may have been fruitful or futile. Hence out of scope.

rishabh1105 · Answer

Consultant: Since the appointment of its new CEO last year, profits at Brakeland Insurance Company have declined. While accident claims involving privately owned cars have increased, along with the associated increase in cost in time for Brakeland employees who have to interact with all the different customers with claims, these increases are not primarily responsible for driving down profits. Instead, the decline in profits is primarily due to the inefficient corporate structure at Brakeland, with costly duplication of roles in customer service. After all, Sterling Auto Insurance Company has seen a similar increase in accidents among its insured vehicles, but while Brakeland's profits have decreased, Sterling's have increased in the same time period. Moreover, Sterling has a somewhat smaller customer service team than Brakeland has.

Which of the following most weakens the consultant’s argument?

Weaken the argument question
Conclusion: The decrease in profit is not due to the increase in interaction but due to inefficient corporate structure

A. In the insurance field, an individual customer service representative, on average, tends to get paid substantially less than an individual actuary who determines insurance rates.
Even if customer service representative gets paid less, the argument will stand as solid, that the decrease in profit could be because of inefficient corporate structure. Doesnt weaken

B. Sterling’s customer-service approval ratings have always been higher than Brakeland’s, and the difference has increased over the past year.
This shows that customer-service approval for Brakeland is not that great in comparison to other insurances in market. But does it impact the argument anway? No. The structure can still be inefficient due to duplication (their performance doesnt matter on the structure being inefficient)

C. In many industries, downsizing the workforce to eliminate clear duplication of roles is a guaranteed way to increase profits.
May be. The argument is not asking what to do. It is telling that inefficient structure is the reason for this lowering of profits.

D. Individual policies traditionally account for the majority of Brakeland's profits, while large corporate policies have accounted for the majority of Sterling's.
The premise of this argument is based is on Sterling's increase in profit with less customer support staff - pointing them to have more efficient structure - but the author didn't take into account that the reason for lesser customer service staff might be because Sterling has large corporate policies where less interaction might be required /the reason for more profit is because of these corporate clients and not because of efficient structure. So this weakens the way premise is used to support the conclusion by reminding author that he missed to account for this.
Weakens

E. Brakeland's new CEO has instituted a policy of hands-on management with the intention of ensuring that senior members of staff are aware of all company problems.
So what? The argument still would hold true that company has inefficient customer staff

Bunuel · Answer

OFFICIAL EXPLANATION

The consultant says that the decline in profits at Brakeland are due, not to the rising number of claims and time dealing with them, but to the inefficient corporate structure. We want to weaken the consultant’s argument: presumably we want to show that the decline in profits is in fact due to the rising number of claims, by undercutting the comparison with Sterling.

The credited answer is (D).  Brakeland has mostly individual accounts, so each claim involves a new owner and the time “to interact with all the different customers.” By contrast, Sterling has mostly large corporate accounts: at a large corporation, either one person or a small department of people would handle all the claims, and these people would be familiar with insurance, unlike folks in the general public. The employees at Sterling might handle multiple claims talking to one account manager at a big corporation. These circumstances would explain why dealing with claims would take more time at Brakeland and why what happens at Sterling is not a good comparison for what happens at Brakeland.

Choice (A) is about pay, and may play into low employee satisfaction for the CSRs, but by itself, this doesn’t explain the decline in profits. It might cut into profits if Brakeland hired many more actuaries than necessary, but we don’t know whether Brakeland has done so. Choice (A) is incorrect.

Do customer-service approval ratings have direct short-term impact on profits? While they probably are not unrelated to profits, it’s not clear that these rating by themselves would be responsible for the continued decline in Brakeland’s profits. Choice (B) is incorrect.

If an “inefficient corporate structure” were the problem, then certainly downsizing might be an efficient solution. The question, though, is what is truly the cause of the decline in profits. Choice (C) is incorrect.

If senior managers at Brakeland are aware of all company problems, what does this mean for this argument? It may mean that the senior managers understand the real cause of the decline in profits, customer claims vs. inefficient corporate structure, but this choice doesn’t share with us what conclusion these senior managers might have drawn. This fact alone doesn’t imply anything clear about the argument, so (E) is incorrect.

PSKhore · Answer

The consultant's argument is weakened by option  D . If individual policies contribute the majority of Brakeland's profits and large corporate policies contribute the majority of Sterling's, and if the increase in accidents disproportionately affects individual policyholders, then it's possible the accident increase is hitting Brakeland harder than Sterling, thus driving down Brakeland's profits.

Here's why the other options are not as strong:

A :This statement is irrelevant. It compares the salaries of different roles within the insurance industry, not the overall impact on company profits.

B :This strengthens the argument that Sterling is doing something right, but it doesn't address the root cause of Brakeland's problems.

C :This is a general statement about downsizing and doesn't address the specifics of Brakeland's situation. It also doesn't weaken the consultant's claim that the duplication of roles is the primary cause.

E :This actually supports the consultant's argument by suggesting the new CEO's management style is having a negative impact.

Source: AI Overview

Consultant: Since the appointment of its new CEO last year, profits at

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Consultant: Since the appointment of its new CEO last year, profits at

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