What best describes how auto insurance companies manage risk?

Auto insurance companies manage risk by using statistical analysis and data modeling to assess the likelihood of claims based on various factors, such as the driver's history, vehicle type, and location. They categorize drivers into different risk profiles to determine premiums, ensuring that higher-risk individuals pay more for coverage. Additionally, insurers implement measures like deductibles and coverage limits to mitigate potential losses. By continuously analyzing claims data, they adjust their policies and pricing strategies to maintain profitability while offering competitive rates.