A reduction in average premium per account is likely to result from which action?

A reduction in average premium per account typically occurs when an overall rate decrease is implemented. When an insurance company decides to lower its rates, it essentially makes its premiums more affordable for existing and potential customers. This can lead to an increase in the number of accounts as more clients are attracted to the lower prices offered. As a result, the average premium that the company collects per account decreases because it is charging less per policy.

In contrast, when competitors reduce their prices, it may lead to pressure on an insurance company to lower its rates to remain competitive, but this is not a direct action taken by the company itself and may not guarantee a decrease in average premiums. An overall rate increase would raise average premiums per account, while a decrease in market share often indicates that an insurer is losing clients, which could lead to a higher average premium if less profitable accounts are lost. Thus, choosing to decrease the overall rates directly results in a drop in the average premium collected.