Underwriting directly affects an insurance company's chances of success. If underwriting standards are too high, then people will be unjustly denied insurance converge and insurance sales will:
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A. B. C. D.C
Underwriting is a critical function of insurance companies, which involves assessing and evaluating the risks associated with insuring individuals, businesses, and assets. Insurance underwriters use statistical models and actuarial tables to determine the likelihood of a particular event occurring, such as an accident, illness, or natural disaster. Based on this assessment, they determine the premium that the policyholder must pay to receive insurance coverage.
If underwriting standards are too high, it means that the insurance company is imposing strict criteria for insurability, which may result in some people being denied coverage. For instance, if an insurance company sets a very high threshold for health or age-related conditions, individuals who do not meet the standards may be declined coverage, despite the fact that they may be willing to pay a premium.
The consequence of this is that insurance sales will drop. When people are unjustly denied insurance coverage, they will seek other providers who have more lenient underwriting standards or may simply forego coverage altogether. This, in turn, will reduce the insurance company's revenue and profitability, as they will have fewer policyholders paying premiums.
Therefore, the correct answer to the given question is (C) Drop. When underwriting standards are too high, insurance sales will drop.