What is constrained when a policy is under financial holds?

When a policy is under financial holds, the specific aspect that is constrained is the payment of costs and expenses associated with claims. This means that while claim processing may still move forward in terms of documentation and assessments, the actual financial outflows—like the payment of costs related to claims or general expenses associated with the policy—are restricted until the hold is resolved.

The other choices indicate different areas related to claims processing that may not necessarily be impacted by a financial hold. Claims processing and adjustments, for instance, can often continue even with financial holds in place, as these processes do not immediately require payment. Similarly, new claim creation and modifications can occur because they are focused on the administrative aspects rather than the financial transactions tied to existing claims. Settlements are also not limited strictly by a financial hold in terms of processing; however, actual payment to settle those claims would be restricted. The correct answer highlights the specific financial limitations that prevent necessary payments while a policy is under financial holds.