CAT Questions | CAT Paragraph Completion Questions

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Question 2: The better behaviour resulting from smart devices is just one threat to the insurance industry. Conventional risk pools (for home or car insurance, for example) are shrinking as preventable accidents decline, leaving the slow-footed giants of the industry at risk. Business is instead moving to digital-native insurers, many of which are offering low premiums to those willing to collect and share their data. Yet the biggest winners could be tech companies rather than the firms that now dominate the industry. Insurance is increasingly reliant on the use of technology to change behaviour; firms act as helicopter parents to policyholders, warning of impending harm—slow down; reduce your sugar intake; call the plumber—the better to reduce unnecessary payouts.

1. The growing mountain of personal data available to individuals and, crucially, to firms is giving those with the necessary processing power the ability to distinguish between low-risk and high-risk individuals.
2. Cheap sensors and the tsunami of data they generate can improve our lives; blackboxes in cars can tell us how to drive more carefully and wearable devices will nudge us toward healthier lifestyles.
3. Yet this sort of relationship relies on trust, and the Googles and Apples of the world, on which consumers rely day-by-day and hour-by-hour, may be best placed to win this business.
4. The uncertainty that underpins the need for insurance is now shrinking thanks to better insights into individual risks.

Explanatory Answer

Method of solving this CAT Question from Paragraph Completion:

The main point of this paragraph is that technology is producing some threats to the insurance industry, and that tech companies could be the biggest winners in this.

Starting off by mentioning the threats, the author has declared that “yet the biggest winners could be tech companies� and, in justifying why so, he talks of how insurance is using technology to change behaviour to reduce payouts.

Consider option A. This talks of how data available to individuals and firms is helping them assess risk better. It doesn’t carry forward the thought about helicopter parenting from the penultimate line of the paragraph.

Option B talks of how smart devices are helping improve lives and lifestyles. This substantiates the threat of “better behaviour resulting from smart devices� that the author refers to while starting the paragraph. It doesn’t conclude the paragraph.

Option D is ruled out as it talks of reducing uncertainty due to better insights into risks. This is the basic premise on which this paragraph is based, but does not conclude the given paragraph.

Option C talks of “this sort of relationship� and why the tech companies are better placed to win business based on trust. This provides the reasoning for why the author thinks tech companies are the biggest winners, so this is the correct concluding line.

The question is " Choose the Sentence that completes the Paragraph "

Hence, the answer is Sentence C

Choice C is the correct answer.