Math 3620, Section 2 Assignment #2: Pricing Gampel Insurance Company is preparing several insurance proposals for Mirror Lake Manufacturing. The estimated loss distribution for Mirror Lake is as follows: Loss Amount Probability $300,000 1% $150,000 4% $20,000 20% $10,000 35% $5,000 SO 20% 20% This loss distribution is the same for each question in this assignment. Each full question is worth 20 points (5 points per part) 1. Assume: Losses occur and are paid one year from policy inception Underwriting expenses are 10% of pure premium and are paid at policy inception Claim settlement expenses are 25% of pure premium and are paid when the losses are paid Fair profit provision is 8% of pure premium . Interest rate is 5%. a. What is Gampel's estimate of the pure premium? b. What is the provision in the fair premium for (discounted) claims adjustment expenses? c. What is the fair profit loading for the premium? d. What is Gampels estimate of the fair premium? Math 3620, Section 2 Assignment #2: Pricing Gampel Insurance Company is preparing several insurance proposals for Mirror Lake Manufacturing. The estimated loss distribution for Mirror Lake is as follows: Loss Amount Probability $300,000 1% $150,000 4% $20,000 20% $10,000 35% $5,000 SO 20% 20% This loss distribution is the same for each question in this assignment. Each full question is worth 20 points (5 points per part) 1. Assume: Losses occur and are paid one year from policy inception Underwriting expenses are 10% of pure premium and are paid at policy inception Claim settlement expenses are 25% of pure premium and are paid when the losses are paid Fair profit provision is 8% of pure premium . Interest rate is 5%. a. What is Gampel's estimate of the pure premium? b. What is the provision in the fair premium for (discounted) claims adjustment expenses? c. What is the fair profit loading for the premium? d. What is Gampels estimate of the fair premium