What does the term "excessive claims" imply in insurance?

The term "excessive claims" in the context of insurance refers to a high number of claims filed by a policyholder, which may raise red flags for the insurer regarding potential fraud or misuse of the insurance policy. When an individual submits a significantly greater number of claims compared to the average for similar policyholders, it can suggest that the policyholder may be engaging in fraudulent behavior, such as inflating claims or filing unnecessary claims to benefit financially.

This monitoring helps insurance companies manage risk and ensures that resources are allocated appropriately. A pattern of excessive claims could lead an insurer to investigate the legitimacy of the claims or take further action, such as adjusting the policyholder's premiums or limiting coverage options.

Other options do not capture the essence of what "excessive claims" signifies. Insufficient claims, routine claims, or lapsed coverage addresses different concerns within the insurance framework and do not reflect the issue of claim frequency and potential abuse.