1. You are planning to purchase property insurance for your building. You are analyzing two insurance coverage bids. The bids are from comparable insurance companies, the coverages are identical, and the policy limits are the same. The premiums and deductibles, however, differ.

Insurer As coverage requires an annual premium of Rs 1,12,800 with Rs 58,000 per-claim deductible.

Insurer Bs coverage requires an annual premium of Rs 8,82,100 with a Rs 12,000 per-claim deductible.

Based on experience you expect the following losses to occur over the next two years

Expected number of losses	Expected size in Rs
12 (1 loss at the end of every month)	51280
6 (1 loss at the end of every 2 months)	68210
4 (1 loss at the end of every quarter)	81280

Which proposal you should select? Assume that premiums are paid at the start of the policy period. Losses and deductibles are paid at the end of every month, every quarter or every 6 months (as indicated in the table above). Assume the discount rate to be 15 percent. (You are expected to show every step and logic applied to arrive at your answer) 10 Marks