in 2008, the us state of hawaii enacted rate stability regulations (rsrs), constraining insurance companies…

in 2008, the us state of hawaii enacted rate stability regulations (rsrs), constraining insurance companies latitude to raise premiums (the periodic fees policyholders pay to maintain insurance policies) after policies are in effect. rsrs are effective at protecting existing policyholders from price volatility, but naoki aizawa and ami ko note that since dynamic pricing of premiums is an important risk - mitigation tool for insurers, rsrs may lead some insurers to scale back or entirely cease selling new policies in the affected market, thereby reducing the competitive pressure that typically restrains premium prices for new policies. thus, hawaiis rsrs may ____ which choice most logically completes the text? a. benefit policyholders at the expense of nonpolicyholders seeking to acquire policies. b. reduce premium price volatility once policies are in effect but increase risks for policyholders. c. prevent large increases in premium prices for new policies despite leading to fewer insurers offering such policies in the affected market. d. be more advantageous for insurers than they are for either current or prospective policyholders.

in 2008, the us state of hawaii enacted rate stability regulations (rsrs), constraining insurance companies latitude to raise premiums (the periodic fees policyholders pay to maintain insurance policies) after policies are in effect. rsrs are effective at protecting existing policyholders from price volatility, but naoki aizawa and ami ko note that since dynamic pricing of premiums is an important risk - mitigation tool for insurers, rsrs may lead some insurers to scale back or entirely cease selling new policies in the affected market, thereby reducing the competitive pressure that typically restrains premium prices for new policies. thus, hawaiis rsrs may ____ which choice most logically completes the text? a. benefit policyholders at the expense of nonpolicyholders seeking to acquire policies. b. reduce premium price volatility once policies are in effect but increase risks for policyholders. c. prevent large increases in premium prices for new policies despite leading to fewer insurers offering such policies in the affected market. d. be more advantageous for insurers than they are for either current or prospective policyholders.

Answer

Brief Explanations:

The text states that RSRs protect existing policyholders from price volatility but may cause some insurers to stop selling new policies, reducing competition and potentially harming non - policyholders seeking new policies. Option A correctly captures this trade - off. Option B focuses only on policyholders' risks. Option C is contrary to the text as RSRs may lead to fewer insurers and not prevent large increases for new policies. Option D is not supported as the text shows RSRs have both positive and negative impacts on different groups.

Answer:

A. benefit policyholders at the expense of nonpolicyholders seeking to acquire policies.