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

Question

In one year 2,100 malpractice claims were filed with insurance company X and of these 1/4 resulted in a financial settlement. Of those resulting in a financial settlement of less than $400,000, what was the average payment per claim?

(1) Company X paid a total of 24.5 million dollars to the claimants.
(2) Only 5 claims resulted in payments of $400,000 or more.

ID: 700133
DS21201

Codebug4it · Answer

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 $.

Basshead · Answer

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.

TestPrepUnlimited · Answer

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

jin.h · Answer

A total of 1/4 (2,100) = 525 claims were paid. What was the average payment per claim of those claims having a payment less than $400,000?

(1)  Given that the total payment for the 525 paid claims was $24.5 million, it is not possible to determine the average payment per claim. This is because almost nothing is known about the total payment for those claims less than $400,000 or the number of those claims less than $400,000 (we only know they cannot exceed $24.5 million and 525 paid claims), and thus, more than one value is possible for the average payment per claim for those claims less than $400,000; NOT sufficient.

(2)  Given that a total of 5 paid claims had payments of $400,000 or greater, it is not possible to determine the average payment per claim. This is because nothing is known about the total payment for those claims less than $400,000, and thus, more than one value is possible for this total payment divided by 520 (i.e., the average payment per claim for those claims less than $400,000); NOT sufficient.

Taking  (1)  and  (2)  together, it is still not possible to determine the average payment per claim. For example, if each of the 5 paid claims of over $400,000 was equal to $500,000, then the average payment per claim for those claims less than $400,000 would be . However, if each of the 5 paid claims of over $400,000 was equal to $4 million, then the average payment per claim for those claims less than $400,000 would be , which is different from the first example. 
  The correct answer is E; both statements together are still not sufficient.

bumpbot · Answer

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

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

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