Question No. 1:-

Explain the concept of large numbers of law in the insurance sector, and then determining the six requirements of an insurable risk.

Question No. 2:-

Delta Insurance is a property insurer that enter into a surplus reinsurance treaty with Ever safe Re. Delta has a retention limit of $200,000 on any single building, and up to nine lines of insurance may be ceded to Ever safe. A building valued at $1.6m is insured with Delta. Shorty after the policy was issued; a severe windstorm caused a $800,000 loss to the building.

1. How much of the loss will Delta pay?
2. How much of the loss with Ever safe pay?
3. What is the maximum amount of insurance that Delta can write on a single building? Explain your answer.