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Question 2, please. 1. Zink Risk Services insures a commercial warehouse which is valued at $300,000. Zink estimates that the warehouse faces the following distribution
Question 2, please.
1. Zink Risk Services insures a commercial warehouse which is valued at $300,000. Zink estimates that the warehouse faces the following distribution of potential losses: 85% probability of $0 loss 10% probability of $20,000 loss (a small fire) 3% probability of $100,000 loss (a tornado strike) 1.5% probability of $200,000 loss (an earthquake) 0.5% probability of $300,000 loss (a large fire) Zink Risk Services needs a loading charge of 32% in order to pay all relevant business expenses and commissions when selling its policies. What is the pure premium and the gross premium for the insurance policy on this warehouse? 2. Zink Risk Services sells $400,000,000 in total premiums in 2015. In 2015, Zink paid loss and loss adjustment expenses of $286,000,000. In 2015, Zink paid administrative and other underwriting expenses of $118,000,000. For 2015, what were the loss expense, and combined ratios for Zink Risk Services? For 2015, what can you say about the overall profitability of Zink Risk ServicesStep by Step Solution
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