This is an Explain the Unexpected Result question.
We should read the stimulus and extract the two paradoxical facts.
i. Places with strict car safety requirements have higher average accident rates than do places with less strict requirements.
yet
ii. Safety experts agree that the stricter safety requirements reduce accident rates
While these types of questions don't often lend themselves to making predictions, this is a pretty familiar LSAT pattern.
For example, if I told you that areas with highest per capita crime rate tended to have the highest number of police per capita, would you have to believe that the police in those areas are having no effect on lowering the crime rate (or, even worse, that the police in those areas are actually responsible for the high crime rate)?
No, you could always say that the crime rate was sky high in these areas, and by pouring tons of police officers into these areas, we have lowered the crime rate, even if it's still higher than all other areas.
Similarly, we can believe that strict car safety rules help lower accident rates without having to believe that the strictest car safety areas will be the areas with the lowest accident rates.
(C) is the correct answer. It tells us that the strictest car safety areas were the most dangerous, accident prone areas to begin with. So it's possible that the strict car safety rules DO help to lower the local accident rate, but that lowered rate is still a higher accident rate than that of the less congested, less accident prone areas. This answer allows us to explain how both halves of the paradox could be simultaneously true.
=== other answers ===
(A) This helps us to explain the 2nd fact, why experts believe that strict standards reduce accident rates. But it does nothing to explain the other half of the paradox, why these stricter areas have higher accident rates than do the less strict areas.
(B) This helps us to explain the 1st fact, why the strict areas still have a higher accident rate. But it does nothing to explain the 2nd half, why experts still believe the strict standards work.
(D) This agrees with the 2nd fact, but it exacerbates the paradox of why the 1st fact is true. If people in strict areas wear seat belts, take themselves seriously, and drive less recklessly, then why is the accident rate higher in those areas?
(E) This is irrelevant. The statistic is expressed as "rate of accident per kilometer driven". The total number of kilometers available to be driven does not matter. It could not be distorting the statistic.