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An insurer sells policies to customers with this loss distribution: $75,000 with probability 0.005 $50,000with probability 0.007 Loss = $25,000 with probability 0.030 $15,000 with
An insurer sells policies to customers with this loss distribution: $75,000 with probability 0.005 $50,000with probability 0.007 Loss = $25,000 with probability 0.030 $15,000 with probability 0.050 $ 0 with probability 0.908 a-What is the expected claim cost per policy? b-If claims are paid one year after premiums are received and the interest rate is 4 percent, what is the discounted expected claim cost per policy? c-If the only administrative cost is the cost of processing the application which is $100 per policy, and the fair profit loading is $45, what is the fair premium?
An insurer sells policies to customers with this loss distribution:
$75,000 with probability 0.005
$50,000with probability 0.007
Loss = $25,000 with probability 0.030
$15,000 with probability 0.050
$ 0 with probability 0.908
a-What is the expected claim cost per policy?
b-If claims are paid one year after premiums are received and the interest rate is 4 percent, what is the discounted expected claim cost per policy?
c-If the only administrative cost is the cost of processing the application which is $100 per policy, and the fair profit loading is $45, what is the fair premium?
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Financial Management For Public Health And Not For Profit Organization
Authors: Steven A. Finkler
3rd International Edition
0138152772, 9780138152772
