D. To prepare premium rates the amounts customers pay) for an insurance plan, an insurance company conducts an extensive risk study to
determine the probability that a member of a certain group may require
a pay-off. Based on these probabilities, the expected amount of payoff
is charged to the customer as part of the premium. Explain why car
insurance companies charge a higher premium for teenage drivers
with a clean driving record than for adult drivers with a clean driving
record.