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appropriate risk financing strategies for the fleet. To determine the risk financing alternatives, the CRO recommended that the maximum probable yearly aggregate loss (MPY) must

image text in transcribed appropriate risk financing strategies for the fleet. To determine the risk financing alternatives, the CRO recommended that the maximum probable yearly aggregate loss (MPY) must be calculated for the fleet. The historical financial data of the fleet is incomplete and certain critical components need to be calculated. Claims inflation forms a significant component of the total claims cost per accident and for that reason it is important to include claims inflation in the data. For the purpose of this exercise, the CRO defined claims inflation as the administration cost and effect of exchange rate fluctuation. The board of Logistix stated in the last annual report that the company adopted a conservative risk appetite. Exchange rates have a significant effect on claims inflation as 40% of claims cost is in foreign currency. Defer to the tahle for the annu ial inflation rate and annronriate eychanne rate The hictorical information available for the fleet is as follows: Question Determine the claims administration marginal cost per claim for the year 2017 by incorporating the information provided in the table above. a. R440 b. R527 c. R566 d. R472

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