An Entity's Loss Settlement Practices

A

The statement "An entity's practices concerning loss settlement, such as a practice of vigorously defending suits or of quickly settling suits, can have a significant effect on an entity's loss experience" is true.

An entity's loss experience is the amount of losses that it incurs over a period of time. Losses can be the result of various factors, such as claims made against the entity, damages to property, or liability claims. The entity's practices concerning loss settlement can significantly affect its loss experience.

For instance, if an entity has a practice of vigorously defending suits, it may be able to reduce the amount of damages paid out in settlements or judgments. This approach may result in a lower loss experience for the entity over time.

On the other hand, if an entity has a practice of quickly settling suits, it may pay out more in damages, which may result in a higher loss experience over time. This approach may be useful if the entity values avoiding prolonged litigation and negative publicity more than the cost of paying out damages.

Therefore, the entity's practices concerning loss settlement can significantly affect its loss experience, and it is essential for the entity to carefully consider its approach to loss settlement in order to manage its risks effectively.