a) Blue Mountain Coffee Company offers medical costs coverage for its employees. Its probability distribution for medical

costs for the coming year is as follows:

$ 0 with a probability of 0.9245

$ 4,000 with a probability of 0.040

$ 18,000 with a probability of 0.0250

$ 85,000 with a probability of 0.0100

$ 900,000 with a probability of 0.0005

Determine the expected claim costs for each of the following policies:

i. Full insurance .

ii. $2,000 deductible, 20 percent coinsurance and a $600,000 limit.

b) Some insurance departments develop summaries of auto insurance rates charged by different insurers for a benchmark

set of coverages and driver characteristics and make this available to consumers on request. Describe the possible benefits

and costs of this form of disclosure, including the usefulness of this information.