Small Town used to be just that—a small town 6 miles from Large City

Small Town used to be just that—a small town 6 miles from Large City. Over the years, the area between Small Town and Large City has developed, and now Small Town is part of the suburbs surrounding Large City.

An auto insurer that operated in the area had a large increase in auto claims from Small Town insureds. The insurer did not adjust its rates, and this year will lose money because of claims attributable to higher population density. Which business rating objective did this insurer fail to meet?
A) simplicity
B) stability
C) responsiveness
D) encouragement of loss control

ANSWER

Answer: C