Insurance acts as an operational risk transfer mechanism at a price $($premium$).$ After considering the operational risks, Mr Khoza decided to take the passenger insurance policy for the passengers at R$2000\mathrm{.}00$ per month. During a trip, his brother's taxi had a blow$-$out, and the taxi overturned, seriously injuring six passengers who were hospitalized, while the remaining three passengers were not injured. Medical care for the injured passengers was R$180000$ and the hospitalization was R$20000$ per injured passenger for five days. Two passengers were hospitalized for five additional days at R$4000\mathrm{.}00$ per passenger per day.

Analyze this situation in terms of the insurance contract and make recommendations on the feasibility of Mr Khoza's insurance contract. 

Answer rating: 100% (QA)

The situation described in this question hinges around an insurance policy taken out by Mr Khoza for his taxi passengers He was paying a premium of R2... View the full answer