Which of the following represents a concern due to riskier or unprofitable lines within the written premium section?

• A. Increase in exposure to riskier/unprofitable lines
• B. Decrease in exposure to riskier/unprofitable lines
• C. Improvement in loss ratio
• D. Reduction in net premiums earned

Answer: (A)

Focusing on the mix of business written is key here. If the written premium grows mainly from lines that are riskier or historically unprofitable, the insurer is taking on higher expected losses relative to the premiums earned. That shift raises the potential for a worse loss experience and a higher combined ratio, even though total premiums written are increasing. So the concern is the increase in exposure to those risky or unprofitable lines, because it can erode profitability and financial stability. Decreasing exposure, or improvements in loss ratio, would be favorable, and a reduction in net premiums earned doesn't directly capture the risk mix issue in the written premium portion.