Explain the rationale for the rebate policy

Reference no: EM131145303

Safety Rebate from the Insurance Company. In 2010 a leading insurance company started a policy that pays a policy holder a 5 percent rebate on his or her insurance premium in any year in which the driver does not file an insurance claim. For example, a household with an annual premium of $1,200 will get a $60 rebate check each year it does not file a claim. Explain the rationale for the rebate policy. What problem is the policy trying to solve? (Related to Application 6 on page 632.)

Reference no: EM131145303

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