show work please

Problem 4: Two firms, Risky Corporation (RC) and Safe Haven (SH), differ in the probability of a liability lawsuit. The claim cost is $5m for each of the two companics but RC's probability of a claim is 0.05 whereas SH's is 0.03. Insurers do not observe these difference at the time they contract with these companies. a) Assume the insurer charges $0.04 per dollar of coverage. At this price, RC demands full insurance whereas SH only covers 60% of their exposure. Find the premiums, expected claim costs and the insurer's expected profit or loss for each firm. Is the insurer's pricing sustainable? b) Now assume that the insurer charges $0.045 per dollar of coverage. RC still buys full insurance whereas SH covers only a third of their exposure. Find the premiums, expected claim costs and the insurer's expected profit or loss for each firm. Evaluate the resulting market outcome. c) Explain verbally how the insurance market is affected by unobservable differences in risk types. Be specific and detailed