Which would be a likely result of inaccurate class ratings?

Inaccurate class ratings can lead to improper allocation of premiums. Class ratings are used by insurance companies to categorize risks and determine how much premium should be charged for different groups of policyholders. If these ratings are not accurate, some policyholders may be charged too much while others may be undercharged. This results in a misalignment between the risk associated with a particular class of policyholders and the premiums being collected. Consequently, the insurance company may struggle with solvency, as it may not collect enough premiums to cover the claims it has to pay out, leading to financial instability.

Furthermore, an improper allocation of premiums can create unfair situations among policyholders, resulting in trust issues with the insurer and potentially leading to decreased customer satisfaction over time. This demonstrates how critical accurate class ratings are in maintaining a balanced and fair pricing structure in the insurance industry.