Question 3

The management of Healthy Fish Ltd plans to purchase a logistics company. As a result, the due diligence team obtained the following loss data from the records of the target company.

Expected number of accidents		Expected total claims cost per event	Expected probability of losses
	25	R 100 900	0.15
	35	R 130 203	0.25
	20	R 150 304	0.2
	15	R 170 212	0.15
	12	R 180 386	0.1
	10	R 200 560	0.15

a. Calculate the maximum probable yearly (MPY) according to the Chebyshev method by using the following formula:

=()+(). The k value obtained from a consultant was 1.17. (7 marks)

b. Argue how you will use the MPL to negotiate insurance cover. (5 marks)