How does an insurer’s right of subrogation benefit them?

The answer that identifies how an insurer's right of subrogation benefits them is correct because subrogation gives insurers the ability to pursue recovery of costs from third parties responsible for a loss after they have paid the insured's claim. By doing so, insurers can minimize their overall losses and improve their financial standing when they successfully recover funds.

The practice of subrogation directly impacts the insurer's loss ratio, which is a measure of losses compared to earned premiums. By recovering payments from at-fault parties, an insurer can offset the costs incurred from claims, which can positively influence profitability and ultimately allow them to maintain competitive pricing for their policies.

Other options do not accurately convey the benefits of subrogation. The idea that it allows for an increase in coverage limits is misleading since subrogation doesn't inherently affect the coverage limits available to an insured. The ability to issue more policies is not a direct result of subrogation; instead, it relates to the insurer's risk assessment and capital management. Lastly, while raising premiums can be a strategy for financial adjustment, it is not a direct benefit from the practice of subrogation but rather a broader consideration of pricing strategies based on overall claims experience.