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Case 3: (14 marks) Mr. Mathew Cooper is the CRO (Chief Risk Officer) of Dunmore Corp. a textile manufacturing corporation. Mr. Cooper is looking to
Case 3: (14 marks) Mr. Mathew Cooper is the CRO (Chief Risk Officer) of Dunmore Corp. a textile manufacturing corporation. Mr. Cooper is looking to purchase insurance for the factory against any damage or losses to the goods and is seeking to find the best offer. He narrowed the options down to the offer of Nationwide Insurance and Pyramid Analytics. Nationwide (offer #1) requires an annual premium of $200,000 paid at the beginning of the year, with a deductible of 16,000 per claim paid at the end of the year. Pyramid Analytics (offer #2) requires an annual premium of $75,000 paid at the beginning of the year, with a deductible of 23,000 per claim. Discount rate is 10% Expected Number of Losses 10 Expected Size of Losses 15,000 20,000 25,000 4 2 Which bid should Mr. Cooper select and why
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