Question

Property casualty insurance companies invest in shorter term securities because:

1. They are not allowed to invest in long-term securities.
2. To avoid greater decline in securities value if market interest rates rise.
3. They need to have sufficient liquidity to cover frequent claims resulting from property damage.
4. Short term securities will result in lower tax liability from sale.

Answer 1

Property and casualty insurance a type of coverage that help protect the property and the person owning the property. It cover all stuff one owns like homes and cars.casualty insurance covers all policies which include liability coverage to protect the owner if the responsibility for an accident that cause injury to another person or damage to other person belonging.

So property casualty insurance are frequent in nature and the company who are insuring these, need to be highly liquid in order to pay them.statement (c) is true.

Other statements like they are not allowed to invest in long term securities or to avoid greater decline in value or or they invest for lower tax liabilities are all false.

Correct answer would be option ( C).