What could be a consequence of having a larger sick pool in an insurance company?

Having a larger sick pool in an insurance company generally means that there is a higher concentration of policyholders who are likely to make claims due to illness. This increase in the number of claimants can lead to greater expenses for the insurance company. When the risk of claims increases, the insurance company may decide to adjust its premiums to account for this heightened risk.

Higher premiums are necessary to ensure that the company maintains its financial stability and can cover the increased expenses associated with paying out claims. Additionally, the increased risk can reflect the overall health status of the insured population, which directly influences the company's loss ratios and projected costs for the year. Therefore, in response to a larger sick pool, it would be common for insurers to raise premiums for all insured individuals to offset the increased risk and potential payouts.

Other options, such as increased profits from lower claims or a reduction in the number of policies sold, do not effectively capture the consequences of an increased sick pool, as they suggest favorable conditions that would not likely arise from a bigger concentration of sick individuals.