Inflation in Defense & Cost Containment (DCC) is evaluated separately and is estimated to occur at the same rate as the rate of inflation in the losses.
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A. B.B
The statement implies that inflation in Defense & Cost Containment (DCC) is evaluated separately and that it is estimated to occur at the same rate as the rate of inflation in losses.
The concept of inflation in losses refers to the increase in the cost of claims due to the increase in the general price level. This means that as the cost of goods and services increases, the cost of settling insurance claims also increases.
On the other hand, Defense & Cost Containment (DCC) refers to the efforts made by insurance companies to reduce their costs associated with claims handling, such as legal expenses, investigation expenses, and other administrative costs.
The statement suggests that DCC expenses will increase at the same rate as inflation in losses. However, it is important to note that the rate of inflation in losses and the rate of increase in DCC expenses are not necessarily the same.
Insurance companies may try to limit the increase in DCC expenses to a lower rate than the rate of inflation in losses in order to control costs and maintain profitability. Therefore, the statement is not necessarily true, and the correct answer is B. False.