Pro-Tect Insurance Company has Recently Been Paying out more on Car-theft Claims than it Expected.

Question: Pro-Tect Insurance Company has recently been paying out more on car-theft claims than it expected. Cars with special antitheft devices or alarm systems are much less likely to be stolen than are other cars. Consequently Pro-Tect, as part of an effort to reduce its annual payouts, will offer a discount to holders of car-theft policies if their cars have anti-theft devices or alarm systems.

Which of the following, if true, provides the strongest indication that the plan is likely to achieve its goal?

(A) The decrease in the risk of car theft conferred by having a car alarm is greatest when only a few cars have such alarms.
(B) The number of policyholders who have filed a claim in the past year is higher for Pro-Tect than for other insurance companies.
(C) In one or two years, the discount that Pro-Tect is offering will amount to more than the cost of buying certain highly effective antitheft devices.
(D) Currently, Pro-Tect cannot legally raise the premiums it charges for a given amount of insurance against car theft.
(E) The amount Pro-Tect has been paying out on car theft claims has been greater for some models of car than for others.

Pro-Tect Insurance Company has recently been paying out more on car-theft claims than it expected- is a GMAT Critical reasoning question. This particular GMAT Critical Reasoning topic has been taken from ‘The Official Guide of GMAT Verbal Review 2015’. This particular question is Strengthen the Argument type. For this type, the candidates need to strengthen an argument by providing a piece of supportive evidence or statement. GMAT critical reasoning tests the logical and analytical skills of the candidates. Critical reasoning in GMAT requires candidates to find the strengths and weaknesses of the argument, or find the logical flaw in the argument. The GMAT CR section contains 10 -13 GMAT critical reasoning questions out of 36 GMAT verbal questions.

Answer: C
Explanation:
Evaluation of The Argument

Hypothesis: An Insurance Company has recently been paying out more on car-theft claims than anticipated. To reduce these payments, the company is planning to provide anti-theft devices or alarm systems.

Conclusion: There is no assurance that this plan is likely to succeed. To help reduce this theft Pro-tect Insurance company offers discounts to policyholders whose cars are equipped. This will help with antitheft devices that are less likely to be stolen than other cars without such devices.

Inference: The car owners can probably resist this offer as this can be an additional expense. In case, Pro-Tect sets the discount for installing antitheft devices. The owners may bargain with car owners, then the plan will most likely thrive.

Let us check the given options:

Option A: Incorrect.
Pro-Tect's plan is designed to increase the number of cars equipped with antitheft devices. If this plan works then people will tend to buy the device more and, then Pro-Tect's plan is unlikely to achieve its goal.

Option B: Incorrect.
Pro-Tect's claims here do not claim if the plan will reduce car theft or not.

Option C: Correct.
Option C suggests that Pro-Tect's plan will provide an effective incentive for car owners to install antitheft devices. This statement thereby justifies that if the plan is actively used then the company will likely achieve its goal.

Option D: Incorrect.
Option D raises questions it does or does not involve raising the premiums, and restrictions. So this statement is irrelevant.

Option E: Incorrect.
In option E it does not distinguish between any specific model of car. Hence this statement is irrelevant.

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