Technically a given category of insurance policy is under priced 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 under priced policy does not represent a net loss in every case.
The argument above is based on which of the following assumptions?

Question

Examsnet · Accepted Answer

Correct Answer is :  The claims against at least some underpriced policies do not require paying out all of the premium income from those policies as soon as it is earned.

GMAT Verbal Reasoning Practice Test 6