9. Technically a given category of insurance policy is
underpriced if, over time, claims against it plus
expenses associated with it exceed total income from
premiums. But premium income can be invested and
will then yield returns of its own. Therefore, an
underpriced policy does not represent a net loss in
every case.
The argument above is based on which of the fol-
lowing assumptions?
(A) No insurance policies are deliberately underpriced
in order to attract customers to the insurance
company offering such policies.
(B) A policy that represents a net loss to the insurance
company is not an underpriced policy in every
case.
(C) There are policies for which the level of claims
per year can be predicted with great accuracy
before premiums are set.
(D) The income earned by investing premium income
is the most important determinant of an
insurance company’s profits.
(E) The claims against at least some underpriced pol-
icies do not require paying out all of the pre-
mium income from those policies as soon as it
is earned.
The key is E, why? Could anyone can kindly give me some advice? Thanks in advance![em12]作者: tongxun 时间: 2002-9-24 20:30
