When fraudulent claims rise, which of the following usually does NOT happen within an insurance company?

The option indicating that capacity is increased in certain lines usually does not occur when fraudulent claims rise. When an insurance company experiences a surge in fraudulent claims, it typically leads to heightened scrutiny and caution within the organization. Increasing capacity in specific lines would generally counteract these cautionary measures, as it implies that the insurer is willing to take on more risk in a market already affected by fraudulent activities.

In contrast, the other options represent the standard practices that insurers adopt in response to increased fraud. Raising rates for all policyholders reflects the need to cover potential losses stemming from fraud, thereby distributing the financial impact among all insured individuals. Enhanced fraud detection measures are implemented to prevent further fraudulent activities and to identify existing scams effectively. Stricter underwriting processes are designed to reduce risk exposure by tightening the criteria for accepting new policies and assessing existing ones more carefully.

This response to fraudulent claims serves to protect the insurer's financial health and ensure the integrity of the insurance system as a whole.