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      Question

      What is the primary characteristic of a "soft market" in

      insurance?
      A High premiums and limited coverage. Correct Answer Incorrect Answer
      B Low premiums and increased competition Correct Answer Incorrect Answer
      C High profits and limited competition Correct Answer Incorrect Answer
      D Low profits and increased competition Correct Answer Incorrect Answer
      E None of the above Correct Answer Incorrect Answer

      Solution

      The correct answer is B. Low premiums and increased competition. In a soft market, intense competition among insurers leads to lower premiums and more relaxed underwriting standards.

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