Question

Changes in weather patterns are increasing administrative costs for insurance companies. These added costs often exceed the amount of the premiums coming in and claim payments going out. To address this problem, insurance companies typically Group of answer choices

Answer 1

Answer: D. build up the amount of their reserve

Explanation:

The Insurance companies typically increase the reserves from which they pay these Administrative costs. It is important that they increase the reserve sufficiently because sometimes it may be difficult to accurate quantify just how much will be need to match these new costs. This will ensure that they have enough cash readily available and on hand to meet these cost demands easily and timely.