Question

Why do insurers keep thin profit margins?

a.

To ensure fair risk assessment

b.

To maintain competitive pricing of premiums

c.

To increase the amount of money paid out in claims

d.

To reduce the need for underwriting

Posted under IC22 Life Insurance Underwriting

Answer: (b).To maintain competitive pricing of premiums Explanation:Insurers keep thin profit margins to maintain competitive pricing of premiums. This means that they keep the profit margins low to keep the premiums affordable and competitive in the market, which in turn helps them to attract more customers. This is important because insurance is a highly competitive industry and customers are always looking for the best deals. By keeping their profit margins low, insurers can offer lower premiums, which can help them to gain a competitive advantage in the market.

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