Nopay Bank faces liability and property exposures as follows: Liability Exposures Amount of Loss (S) Probability...
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Nopay Bank faces liability and property exposures as follows: Liability Exposures Amount of Loss (S) Probability of Loss Amount of Loss (S) 8,000,000 4,000,000 0 0 1.5% 98.5% Property Exposures Probability of Loss 3.5% 96.5% (a) If the premium loading for the liability exposure is 35% of expected losses, what is the fair insurance premium for the liability exposure? (Don't be concerned with the time value of money.) (b) If the premium loading for the property exposure is 25% of expected losses, what is the fair insurance premium for the property exposure? (Don't be concerned with the time value of money.) (c) If both the property & liability exposures are bundled together and covered under a single contract that has a premium loading equal to 28% of the bundled expected losses, how much savings in premium will be achieved? (Assume these exposures are independent and as before, don't be concerned with the time value of money.) Nopay Bank faces liability and property exposures as follows: Liability Exposures Amount of Loss (S) Probability of Loss Amount of Loss (S) 8,000,000 4,000,000 0 0 1.5% 98.5% Property Exposures Probability of Loss 3.5% 96.5% (a) If the premium loading for the liability exposure is 35% of expected losses, what is the fair insurance premium for the liability exposure? (Don't be concerned with the time value of money.) (b) If the premium loading for the property exposure is 25% of expected losses, what is the fair insurance premium for the property exposure? (Don't be concerned with the time value of money.) (c) If both the property & liability exposures are bundled together and covered under a single contract that has a premium loading equal to 28% of the bundled expected losses, how much savings in premium will be achieved? (Assume these exposures are independent and as before, don't be concerned with the time value of money.)
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Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
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