DETAIL: You work for an insurer, Indigo Insure, and have been tasked with developing an innovative...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
DETAIL: You work for an insurer, Indigo Insure, and have been tasked with developing an innovative insurance that will cover building defects on new houses and commercial buildings. Arising from the pyrite and mica problems in Ireland, your boss thinks that demand for an insurance like the one proposed will have a strong latent demand. The policy will be called HOME PROTECT and will be available for houses built after 2020 whether they are for owner/occupiers or landlords- also, builders may acquire the insurance and offer it in support of a construction guarantee. The limit will be a maximum of Euro 100,000 on any single building. It will protect against and will pay for the costs of poor workmanship, defective design or poor materials. Information and data available to you includes: a review of 250 houses suggests a 0.05 chance of any construction having an issue. () the sample suggests costs of repair, adjusted for inflation, follow the pattern below.. (ie, these are the only possible claim sizes) 25,000 25,000 25,000 38,000 38,000 69,000 80,000 100,000. Question 1: (a) statistically summarise and comment on the claims information provided and determine a basic premium, (ii) looking at the indicated frequency rate, how confident are you that this is reliable? (b) it is anticipated that 600 insurance will be sold in a year: find the total risk premium (ii) find the standard deviation (iii) assuming 20% is added to the total risk premium for costs, what is the probability of incurring total losses beyond 2,000,000; hence what is the likelihood of having three such years in five ? (c) find the cost of a stop loss reinsuring beyond 40 losses (d) Assuming only a total loss for 100,000 can occur, and that a policyholder has a 100,000 policy limit, where the utility to house value is U= √V, what is the maximum premium that can be charged?. DETAIL: You work for an insurer, Indigo Insure, and have been tasked with developing an innovative insurance that will cover building defects on new houses and commercial buildings. Arising from the pyrite and mica problems in Ireland, your boss thinks that demand for an insurance like the one proposed will have a strong latent demand. The policy will be called HOME PROTECT and will be available for houses built after 2020 whether they are for owner/occupiers or landlords- also, builders may acquire the insurance and offer it in support of a construction guarantee. The limit will be a maximum of Euro 100,000 on any single building. It will protect against and will pay for the costs of poor workmanship, defective design or poor materials. Information and data available to you includes: a review of 250 houses suggests a 0.05 chance of any construction having an issue. () the sample suggests costs of repair, adjusted for inflation, follow the pattern below.. (ie, these are the only possible claim sizes) 25,000 25,000 25,000 38,000 38,000 69,000 80,000 100,000. Question 1: (a) statistically summarise and comment on the claims information provided and determine a basic premium, (ii) looking at the indicated frequency rate, how confident are you that this is reliable? (b) it is anticipated that 600 insurance will be sold in a year: find the total risk premium (ii) find the standard deviation (iii) assuming 20% is added to the total risk premium for costs, what is the probability of incurring total losses beyond 2,000,000; hence what is the likelihood of having three such years in five ? (c) find the cost of a stop loss reinsuring beyond 40 losses (d) Assuming only a total loss for 100,000 can occur, and that a policyholder has a 100,000 policy limit, where the utility to house value is U= √V, what is the maximum premium that can be charged?.
Expert Answer:
Answer rating: 100% (QA)
statistically summarise and comment on the claims information provided and determine a basic premium The data suggests that the chance of any construc... View the full answer
Posted Date:
Students also viewed these marketing questions
-
You are a preparative chemist and have been tasked with developing a method to purify a basic compound (pKa 8.5) from a reaction mixture containing four other compounds. The overall goal is high...
-
You work for an investment banking firm and have been asked by management of Vestor Corporation (not real), a software development company, to calculate its weighted average cost of capital, to use...
-
You work for an MNE that makes and markets cellular telephones. Senior managers want to begin selling the phones in Latin America. To pursue a transnational strategy, management wants to minimize...
-
Rand Medical manufactures lithotripters. Lithotripsy uses shock waves instead of surgery to eliminate kidney stones. Physicians' Leasing purchased a lithotripter from Rand for $2,000,000 and leased...
-
Ayer Test Laboratories does heat testing (HT) and stress testing (ST) on materials and operates at capacity. Under its current simple costing system, Ayer aggregates all operating costs of $...
-
On November 2, 2011, Baz, a U.S. retailer, ordered merchandise from Mat of Japan. The merchandise is to be delivered to Baz on January 30, 2012, at a price of 1,000,000 yen. Also on November 2,...
-
Refer to the information in Exercise 12-3B. During the year, (Appendix Melville Company purchased plant assets for cash, sold investments for cash (the entire \(\$ 7,000\) gain 12A) developed during...
-
Prepare a physical DFD based on the output from Problem 4-4. Use Microsoft Visio or other diagraming software.
-
Should augmented athletes be allowed to compete in the Olympics and professional sports alongside non-augmented athletes? Why or why not? What human augmentations do you feel would be beneficial to...
-
Finley Heaters Inc. is a mid sized manufacturer of residential water heaters. Sales have grown during the last several years, and the companys production capacity needs to be increased. The companys...
-
Question: Can a tutor fix and or correct a opengl code which ( does use glew glad files etc) this is all the data not sure why it error i must have it produce a cylinder and cube and pyramid side by...
-
Quilcene Oysteria Flexible Budget For the Month Ended August 31 Actual pounds (q) 7,100 Revenue ($4.05q) $ 28,755 Expenses: Packing supplies ($0.25q) 1,775 Oyster bed maintenance ($3,400) 3,400 Wages...
-
A company has the following information Sales volume Sales price A favorable variance of $5,400 is which variance? Budgeted 50,000 units $4.00/unit Actual 54,000 units $4.10/unit
-
Your objective is to implement the list abstract data type using both an array and a linked list implementation. A template has been provided for you. Rename the template to Main . java . To be...
-
Suppose the exchange rate between U.S. dollars and BritishPounds is $1.00 = 1.75 Pounds and the exchange rate between theU.S. dollar and the euro is $1.00 = 1.35 euros. What is thecross rate of the...
-
Prepare the closing entries and perform the Post-closing trial balance . Trial adjusted balance Account Balance Accounts receivable 119,000 Prepaid insurance 25,000 Materials (supplies) 3,850 Cash...
-
** 2YSL AG LS
-
Linda Lopez opened a beauty studio, Lindas Salon, on January 2, 2011. The salon also sells beauty supplies. In January 2012, Lopez realized she had never filed any tax reports for her business and...
-
Briefly explain the operation of a periodic inventory system. Include an explanation of how the cost of goods sold is determined.
-
Estimate the ending inventory by the gross profit method, given the following data: beginning inventory, \(\$ 40,000\); net purchases, \(\$ 100,000\); net sales, \(\$ 112,000\); average gross profit...
-
Use your operating systems built-in capability to encrypt a file. Store the enciy'pted file in a folder that can be shared with other users on that computer. Then create a new user account. Assign it...
Study smarter with the SolutionInn App