GMAT Critical Reasoning
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Source: OG
Level: 4
Pro-Teet Insurance Company has recently been paying out more on car-theft claims than it expected. Cars with special antitheft devices or alarm systems are much less likely to be stolen than are other cars. Consequently Pro-Teet, as part of an effort to reduce its annual payouts, will offer a discount to holders of car-theft policies if their cars have antitheft devices or alarm systems.
Which of the following, if true, provides the strongest indication that the plan is likely to achieve its goal?
- A The decrease in the risk of car theft conferred by having a car alarm is greatest when only a few cars have such alarms.
- B The number of policyholders who have filed a claim in the past year is higher for Pro-Teet than for other insurance companies.
- C In one or two years, the discount that Pro-Tect is offering will amount to more than the cost of buying certain highly effective antitheft devices
- D Currently, Pro-Teet cannot legally raise the premiums it charges for a given amount of insurance against car theft.
- E The amount Pro-Teet has been paying out on car-theft claims has been greater for some models of car than for others.