Multiple choice

Directions: Read the passage/argument and answer the question that follows it.

To counter the growing claims ratio of its clients, who take a mediclaim policy for themselves and their dependents, the United Insurance Corp, Pollock has decided to act tough. Most clients take the floater plan wherein the entire medical cover gets transferred to one family member at the time of a medical requirement, if it is not availed of by another family member. This happens within the limits of the total cover available to the family as a whole. The problem has become so acute that currently, the company has slipped into the red, following claims of $1.5 filed for every single dollar collected by it as policy premium.

Which one(s) out of the following, assuming that it is permissible and practically feasible, would MOST CONTRIBUTE to alleviating the problem being faced by the company?

  1. Raising the premium applicable to the respective policies.
  2. Re-look at the accounting policies followed by United Insurance Company.
  3. Refusing to allow the transfer of medical cover to other family members.
  4. Suspending the payment of dividend on stocks held by its stakeholders.
  5. Refusing to give policies to people who suffered from serious illness as children.

  1. 1, but not 2, 3, 4 and 5

  2. 1 and 2 but not 3, 4 and 5

  3. 3, 4 and 5 but not 1and 2

  4. 1and 3 but not 2, 4 and 5

  5. 1, 4 and 5 but not 2 and 3
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The problem being discussed here is that the company is running in losses due to higher claim ratios which are not going to be solved by having a re-look at accounting policies (option choice 2), or suspending the payment of dividend (choice 4- there is hardly any question of any dividend payment if the company is running in losses already) or refusing policies to adult who had serious disease as a child (choice 5 how do we decide it?). Refusing to allow a floater cover (choice 3) defeats its very purpose, which will drive away the customers. Hence, none of these steps is going to solve the problem at all.  In the given circumstances, choice 1 seems to be the most sensible one. Hence option (1) is the correct answer.

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