What is a potential consequence of identity theft on insurance companies?

The potential consequence of identity theft on insurance companies that is particularly relevant is the increased claims leading to higher policy costs. When individuals experience identity theft, they may file claims for various losses, including unauthorized transactions, legal fees, or expenses incurred while restoring their identity.

As the volume of claims rises due to a surge in identity theft incidents, insurance companies face greater financial liabilities. This uptick in claims can lead to an overall increase in the costs of providing coverage for policyholders. To mitigate these costs, insurers may consequently raise policy premiums or adjust their underwriting practices, leading to higher costs for all insured individuals.

The other choices, while they could be valid in different contexts, do not capture the immediate and significant impact on insurance companies resulting from a spike in claims. Decreased customer satisfaction or stricter regulations may arise in a broader context, but they are not direct outcomes tied specifically to the financial implications of identity theft on an insurer's claims experience.