Final answer:
The most likely outcome of an overestimated deposit premium is that the insured will receive a return premium. Pricing premiums based on an entire group rather than individual risk profiles can lead to insurance company losses, as it might discourage low and medium-risk clients from buying insurance.
Step-by-step explanation:
If it is determined by an audit that the deposit premium was too high, the most likely outcome is that the insured will receive a return premium. This means that the insurance company will refund part of the premium that was overpaid. It's a common practice in insurance where the actual risk turned out to be lower than the risk estimated when the premium was set. This is generally seen as a fair adjustment to match the actual cost of ensuring the risk.
If an insurance company tries to charge an actuarially fair premium to the group as a whole rather than to each subgroup separately, it could result in losses. High-risk individuals would be effectively subsidized by low-risk ones, which might discourage the latter from maintaining their insurance policies, and the company could lose money compensating for the high-risk individuals.
To prevent this imbalance, insurance companies often segment their customers based on risk and charge premiums accordingly.