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One of my LSAT prep books has a practice argument as quoted below. The answer they are saying is correct makes no sense to me - in fact, I think it is the opposite of the answer! Can someone help me understand where my reasoning is flawed? I am not interested in why the other answers are wrong, but how this one is correct:

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"Editorial: The insurance industry claims that legal costs associated with frivolous lawsuits and outrageous awards are responsible for the skyrocketing price of insurance, but this explanation cannot be correct. Although it is true that legal costs incurred by insurance companies have increased at an accelerating rate over the past several years, these costs have increased at only a fraction of the rate at which the prices that insurance companies charge have increased.

Which one of the following, if true, leads the greatest support to the editorials argument?

Correct response, according to book: "Prices charged by insurance companies do not take into account likely future increases in the legal costs incurred by those companies"

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I don't see how the correct response works. In fact, the insurance companies not taking into account future legal costs incurred would work against the editorials comments. It would suggest that insurance companies are only charging based on current costs and not inflating prices to account for potential future costs.

How does an insurance company not taking into account potential future increases in cost support the argument that increased legal costs are not the reason for increased premiums?

I can't for the life of me see the connection. What am I missing?!?

My two cents.

The industry argument is basically: lawsuits and awards are responsible for price increases
Editorial argument is basically: That isn't true; the prices charged by insurance companies are the real problem, and they are growing much faster than costs from lawsuits and awards.

The correct answer here strengthens the editorial because it shows that the price increases are separate from (and thus guided by a different motivation than) costs associated with lawsuits and awards.

So, if I'm reading it correctly, the argument goes like this:

Insurance Companies: "We've raised the price of insurance because of the cost of frivolous lawsuits and outrageous awards."
Editorial: No, that's not the reason. I know it's not, because you raised the cost of insurance way more than you needed to, since you're not paying that much in legal fees."

So what could the insurance companies argue here? Well, they could say:

Insurance Companies: "Well, we raised costs now to prepare for growing legal costs in the future."
Editorial: "No, that's not the reason either. I know it's not, because prices charged by insurance companies do not take into account likely future increases in the legal costs incurred by those companies. Therefore, you're not increasing costs only because of legal costs, no matter if you're looking at now or the future."

Make sense? Basically, it's bolstering the editorial argument by seeing a possible future objection to his argument (that he hasn't taken future costs into account like the insurance companies have) and heading it off before it even began.
Hope this helps, and good luck on your prep!

Looks like they've got it covered. But as my two cents, I would strongly advise eliminating other answers and understanding why they're wrong. Huge huge part of LR

Thanks! I think this clears it up. I was confused by the 'future costs', but I see how it fits in.

Insurance companies say current price increases are based on legal costs, but current legal costs increased at only a fraction of the rate that premiums increased. So we know that current prices are not dependent completely on current legal costs. A fact being presented that showed current prices do not account for future legal costs means that the current prices are impacted by something other than current and/or future legal prices - validating the editors argument.

Talarose wrote:Looks like they've got it covered. But as my two cents, I would strongly advise eliminating other answers and understanding why they're wrong. Huge huge part of LR

Definitely - in this case I was eliminating all the answers though, so I felt that understanding WHY this answer was right I can then go back and use that information to determine why the other answers were wrong!