Question

Why are insurers often reluctant to sell smaller premium policies?

a.

Smaller premium policies require large volumes of business to be profitable

b.

Smaller premium policies are less profitable for insurers

c.

Smaller premium policies have higher initial expenses

d.

Smaller premium policies have lower renewal expenses

Posted under IC 92 Actuarial Aspects of Product Development

Answer: (a).Smaller premium policies require large volumes of business to be profitable Explanation:Insurers are often reluctant to sell smaller premium policies because these policies require large volumes of business to be profitable. If volumes do not support the insurer, they might stop selling the product as it would not yield the desired returns.

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Q. Why are insurers often reluctant to sell smaller premium policies?
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