Make a comparison of the following insurance coverage premium bids and determine from a costing standpoint, which
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Question:
Martin's Insurance Co. presents a bid requiring an annual premium of $90,000 with a $5,000 per-claim deductible. Tracey Insurance Co. presents a bid requiring an annual premium of $35,000 with a $10,000 per-claim deductible. You wonder whether the additional $55,000 in premiums is necessary to obtain the lower deductible. As the risk manager, you predict the following losses will occur in the coming year (assume a 5% interest rate):
Expected # of Losses / Expected $ of Losses
12 / $5,000
6 / $10,000
2 / >$10,000
n=20
Related Book For
Introduction to Probability and Statistics
ISBN: 978-1133103752
14th edition
Authors: William Mendenhall, Robert Beaver, Barbara Beaver
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