In setting its rates, the Smidlap Insurance Co. used a 60% loss ratio. Smidlaps actual loss ratio, however, was 75%. If Smidlap uses the loss ratio ratemaking method to revise its insurance rate, Smidlap would:

Select one:

a. Increase its rate by 10 percent.

b. Increase its rate by 25 percent.

c. Keep its rate the same.

d. Decrease its rate by 25 percent.