DETAIL: You work for an insurer, Indigo Insure, and have been tasked with developing an innovative...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
DETAIL: You work for an insurer, Indigo Insure, and have been tasked with developing an innovative insurance that will cover building defects on new houses and commercial buildings. Arising from the pyrite and mica problems in Ireland, your boss thinks that demand for an insurance like the one proposed will have a strong latent demand. The policy will be called HOME PROTECT and will be available for houses built after 2020 whether they are for owner/occupiers or landlords- also, builders may acquire the insurance and offer it in support of a construction guarantee. The limit will be a maximum of Euro 100,000 on any single building. It will protect against and will pay for the costs of poor workmanship, defective design or poor materials. Information and data available to you includes: a review of 250 houses suggests a 0.05 chance of any construction having an issue. () the sample suggests costs of repair, adjusted for inflation, follow the pattern below.. (ie, these are the only possible claim sizes) 25,000 25,000 25,000 38,000 38,000 69,000 80,000 100,000. Question 1: (a) statistically summarise and comment on the claims information provided and determine a basic premium, (ii) looking at the indicated frequency rate, how confident are you that this is reliable? (b) it is anticipated that 600 insurance will be sold in a year: find the total risk premium (ii) find the standard deviation (iii) assuming 20% is added to the total risk premium for costs, what is the probability of incurring total losses beyond 2,000,000; hence what is the likelihood of having three such years in five ? (c) find the cost of a stop loss reinsuring beyond 40 losses (d) Assuming only a total loss for 100,000 can occur, and that a policyholder has a 100,000 policy limit, where the utility to house value is U= √V, what is the maximum premium that can be charged?. DETAIL: You work for an insurer, Indigo Insure, and have been tasked with developing an innovative insurance that will cover building defects on new houses and commercial buildings. Arising from the pyrite and mica problems in Ireland, your boss thinks that demand for an insurance like the one proposed will have a strong latent demand. The policy will be called HOME PROTECT and will be available for houses built after 2020 whether they are for owner/occupiers or landlords- also, builders may acquire the insurance and offer it in support of a construction guarantee. The limit will be a maximum of Euro 100,000 on any single building. It will protect against and will pay for the costs of poor workmanship, defective design or poor materials. Information and data available to you includes: a review of 250 houses suggests a 0.05 chance of any construction having an issue. () the sample suggests costs of repair, adjusted for inflation, follow the pattern below.. (ie, these are the only possible claim sizes) 25,000 25,000 25,000 38,000 38,000 69,000 80,000 100,000. Question 1: (a) statistically summarise and comment on the claims information provided and determine a basic premium, (ii) looking at the indicated frequency rate, how confident are you that this is reliable? (b) it is anticipated that 600 insurance will be sold in a year: find the total risk premium (ii) find the standard deviation (iii) assuming 20% is added to the total risk premium for costs, what is the probability of incurring total losses beyond 2,000,000; hence what is the likelihood of having three such years in five ? (c) find the cost of a stop loss reinsuring beyond 40 losses (d) Assuming only a total loss for 100,000 can occur, and that a policyholder has a 100,000 policy limit, where the utility to house value is U= √V, what is the maximum premium that can be charged?.
Expert Answer:
Answer rating: 100% (QA)
statistically summarise and comment on the claims information provided and determine a basic premium The data suggests that the chance of any construc... View the full answer
Posted Date:
Students also viewed these marketing questions
-
You are a preparative chemist and have been tasked with developing a method to purify a basic compound (pKa 8.5) from a reaction mixture containing four other compounds. The overall goal is high...
-
You work for an investment banking firm and have been asked by management of Vestor Corporation (not real), a software development company, to calculate its weighted average cost of capital, to use...
-
You work for an MNE that makes and markets cellular telephones. Senior managers want to begin selling the phones in Latin America. To pursue a transnational strategy, management wants to minimize...
-
Rand Medical manufactures lithotripters. Lithotripsy uses shock waves instead of surgery to eliminate kidney stones. Physicians' Leasing purchased a lithotripter from Rand for $2,000,000 and leased...
-
List at least four applications of linear programming problem.
-
What are some of the sources of monopoly power? Give an example of each.
-
Preparing a Statement of Financial Position LO1-1 Leons Furniture Limited Leons Furniture Limited is one of Canadas largest retailers, selling a wide range of merchandise, including furniture, major...
-
Emerald Island Company is considering building a manufacturing plant in County Kerry. Predicting sales of 100,000 units, Emerald Isle estimates the following expenses: An Irish firm that specializes...
-
Problem 6 - 2 A ( Algo ) Calculate ending inventory, cost of goods sold, sales revenue, and gross profit for four inventory methods ( LO 6 - 3 , 6 - 4 , 6 - 5 ) George Bicycle Shop has the following...
-
Start with the partial model in the file Ch21 P08 Build a Model.xlsx on the textbook's Web site. Kasperov Corporation has an unlevered cost of equity of 12% and is taxed at a 40% rate. The 4-year...
-
Probability in Your Life. Describe a recent instance from your own life when you used probabilil)' to make a decision. What type of probabilil)' did you use> How did it help you make the decision?
-
The rolling moment on a ship at a given instant is \(12 \times 10^{6} \mathrm{Nm}\) clockwise when viewed from the rear. The rotor of the stabilizing gyroscope is of \(12 \times 10^{4} \mathrm{~kg}\)...
-
Explain virtual number of teeth on helical gears.
-
What are the types of gear trains?
-
What is a class-II double-rocker mechanism?
-
What is the difference between a simple and compound gear train?
-
1 10 points If point X is randomly placed on JN below find P X is on JK or MN 6 7 20 13 20 3 4 3 10 K L M 4 2 0 2 4 6 8 10 12 N 14
-
Do animals have rights? If so, what are they? What duties do human beings have toward animals? Does KFC protect animal welfare at an acceptable level?
-
A patient is prescribed \(2.5 \mathrm{mg} / \mathrm{kg}\) of a drug to be delivered intramuscularly, divided into 2 doses per day. If the drug is available in \(5 \mathrm{mg} / \mathrm{mL}\) and the...
-
Match each of the following sounds with a corresponding decibel level: live outdoor concert, birds chirping, window air conditioner, garbage disposal. 1. \(40 \mathrm{~dB}\) 2. \(60 \mathrm{~dB}\) 3....
-
Expenses and the Matching Concept} The following information describes transactions for Morgenstern Advertising Company during July: a. On July 5, Morgenstern purchased and received \(\$ 24,300\) of...
Study smarter with the SolutionInn App