Libre Logistics Ltd. insures against accidents of its motor fleet. The fleet consists of highly specialised, imported refrigerator trucks. Contributing factors to the high value of incidents are the poor conditions of the municipal and provincial roads and the quality of drivers. The following are the records of Libre Logistics Ltd:

Table 1: Loss experience of the motor fleet over the last five yearsYearNo. of vehiclesAverage loss per eventNo of accidentsTotal cost for the year120R1,500,00010R15,000,000220R2,200,00012R26,400,000325R1,750,00015R26,250,000430R2,000,00020R40,000,000550R3,500,00025R87,500,000

Table 2: Quotations under consideration for the insurance of the motor fleetQuote numberQuoted annual premiumAnnual limit for damage to motor fleetDeductible1R15,000,000.00R60,000,000R02R10,000,000.00R30,000,000R25,0003R8,500,000.00R25,000,000R50,0004R6,000,000.00R20,000,000R70,0005R5,000,000.00R10,000,000R100,000

Question

Determine which quote is the most appropriate by using the given the loss experience of the company.

a. Quote number 1appears to be the best alternative. The company will however need to improve the skills of the drivers and put pressure on local and provincial government to improve road conditions.

b. Quote number 3 appears to be the best alternative. The company will however need to improve the skills of the drivers and put pressure on local and provincial government to improve road conditions.

c. Quote number 4 appears to be the best alternative. The company will however need to improve the skills of the drivers and put pressure on local and provincial government to improve road conditions.

d. Quote number 2 appears to be the best alternative. The company will however need to improve the skills of the drivers and put pressure on local and provincial government to improve road conditions.