Answers needed for each part with step by step solution thanks :)

A direct insurer writes a class of business that is subject to the possibility of very large claims. As a result the direct insurer takes out a number of risk excess of loss treaties, the details of which are given below Company A: 250,000 excess of 150,000 on individual claims Company B: 450,000 excess of 400,000 on individual claims Company C excess of 850,000 on individual claims For all excess of loss treaties a stability clause is being used which has a base value of 100 when the treaty was signed Explain the purpose of a stability clause and explain why a stability clause is i) more likely to work when reinsuring large commercial property rather than employer's liability. (4 Marks) A fellow student has said that 'no direct insurer should enter into a contract with a stability clause as it favours the reinsurance company. Explain why they may have reached this conclusion and suggest why they may be incorrect (5 Marks) One of the three reinsurance companies above wants to change the type of cover so that it will only be liable for 80% of the claims in its layer of cover. Explain which of the reinsurance companies is most likely to want this, what they hope to achieve and why the direct insurer may also agree with this proposed change. (5 Marks) iv) One of the reinsurance companies above wants to change the level of cover so that a reinstatement premium is added to the contact. There will be two reinstatement premiums allowed during the year of cover with the reinstatement premium being 140% of the original premium. Explain which of the reinsurance companies is most likely to want this, what they hope to achieve and why the direct insurer may also agree with this proposed change (6 Marks) A direct insurer writing employer's liability wants to use an excess of loss with aggregation by peril. Discuss why the company may want to use such a contract but why they may not purchase one. v) (5 Marks) A direct insurer writes a class of business that is subject to the possibility of very large claims. As a result the direct insurer takes out a number of risk excess of loss treaties, the details of which are given below Company A: 250,000 excess of 150,000 on individual claims Company B: 450,000 excess of 400,000 on individual claims Company C excess of 850,000 on individual claims For all excess of loss treaties a stability clause is being used which has a base value of 100 when the treaty was signed Explain the purpose of a stability clause and explain why a stability clause is i) more likely to work when reinsuring large commercial property rather than employer's liability. (4 Marks) A fellow student has said that 'no direct insurer should enter into a contract with a stability clause as it favours the reinsurance company. Explain why they may have reached this conclusion and suggest why they may be incorrect (5 Marks) One of the three reinsurance companies above wants to change the type of cover so that it will only be liable for 80% of the claims in its layer of cover. Explain which of the reinsurance companies is most likely to want this, what they hope to achieve and why the direct insurer may also agree with this proposed change. (5 Marks) iv) One of the reinsurance companies above wants to change the level of cover so that a reinstatement premium is added to the contact. There will be two reinstatement premiums allowed during the year of cover with the reinstatement premium being 140% of the original premium. Explain which of the reinsurance companies is most likely to want this, what they hope to achieve and why the direct insurer may also agree with this proposed change (6 Marks) A direct insurer writing employer's liability wants to use an excess of loss with aggregation by peril. Discuss why the company may want to use such a contract but why they may not purchase one. v)