Determine the MOST PROFITABLE strategy for two situations where one state that bans PO and one that doesnt ban the practice. Male current rate is $120, Female current rate is $100 (this is the current premium paid by these drivers) Male loss indicated rate is $132, Female loss indicated rate is $94 (this is the rate that your actuaries tell you that you should charge to have a combined ratio of 100 for these drivers' policies) Given different rate changes, below is the likelihood each customer will leave the insurer. The insurer will have to write insurance policies for both males and females in each state (the insurer may not refuse to set a premium for either group, even if unprofitable).

Male Customer % Rate Change Probability of Retention -10% to -6% 92% -5% to 1% 90% 0% 88% 1% to 5% 84% 6% to 10% 80%

Female Customer % Rate Change Probability of Retention -10% to -6% 93% -5% to 1% 91% 0% 90% 1% to 5% 84% 6% to 10% 82%

The four questions you will answer when you open the test are: 1. In a state that BANS Price Optimization, what premium should the insurer charge the MALE customer? 2. In a state that BANS Price Optimization, what premium should the insurer charge the FEMALE customer? 3. In a state that DOESNT ban Price Optimization, what premium should the insurer charge the MALE customer? 4. In a state that DOESNT ban Price Optimization, what premium should the insurer charge the FEMALE customer?