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5. An insurance company has purchased a per risk Excess of Loss reinsurance policy. The insurance companys retention is $500,000. The insurance company has the
5. An insurance company has purchased a per risk Excess of Loss reinsurance policy. The insurance companys retention is $500,000. The insurance company has the following 10 claims: Claim 1 = $1,000,000 Claim 2 = $200,000 Claim 3 = $500,000 Claim 4 = $600,000 Claims 5 to 10 are less than $100,000 each (a) What is the gross loss to the insurance company, prior to reinsurance? (b) What is the net loss to the insurance company, after reinsurance recoveries?
5. An insurance company has purchased a per risk Excess of Loss reinsurance policy. The insurance companys retention is $500,000. The insurance company has the following 10 claims:
Claim 1 = $1,000,000
Claim 2 = $200,000
Claim 3 = $500,000
Claim 4 = $600,000
Claims 5 to 10 are less than $100,000 each
(a) What is the gross loss to the insurance company, prior to reinsurance?
(b) What is the net loss to the insurance company, after reinsurance recoveries?
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