Use these loss distributions to answer questions 14.1-14.4: (8 points)

Liability Exposures		Property Exposures
Amount of Loss	Probability of Loss	Amount of Loss	Probability of Loss
$8,000,000	.015	$4,000,000	.035
$0	.985	$0	.965

14.1. If the premium loading for the liability exposure is 35% of expected losses, what is the fair insurance premium for the liability exposure? (Dont be concerned with the time value of money.)

14.2.If the premium loading for the property exposure is 25% of expected losses, what is the fair insurance premium for the property exposure? (Dont be concerned with the time value of money.)

14.3 If both the property & liability exposures are bundled together and covered under a single contract that has a premium loading equal to 28% of the bundled expected losses, how much savings in premium will be achieved? (Assume these exposures are independent and as before, dont be concerned with the time value of money.)

14.4 A firm has historically purchased separate policies for this property insurance and liability insurance. Each of the policies had $4 million retention. The company is now considering the purchase of a bundled policy which covers both property and liability exposures. The retention of the bundled policy is to be $8 million. Draw a graph illustrating the areas of unnecessary coverage that will exist if the firm continues with separate policies.