How does a company typically respond if a risk assessment indicates high risk?

When a risk assessment reveals a high risk, a company typically responds by adjusting premiums or coverage terms. This approach allows the insurer to align the cost of the insurance coverage with the level of risk presented by the insured party.

Higher risks are associated with a greater likelihood of claims, which can lead to increased costs for the insurer. By increasing premiums, the company can ensure it remains financially viable while covering the potential for more frequent or severe claims. Additionally, adjusting coverage terms might involve imposing restrictions on the policy, such as reducing coverage limits or adding exclusions, to mitigate the risk exposure.

So, the response of adjusting premiums or coverage terms is a standard practice in managing high-risk situations, ensuring that the insurer adequately reflects the associated risks in their pricing and policy offerings.