Question $1(10$ marks$)$

The insurer issued five requirements. Analyse each requirement and state clearly

why the insurer perceived each as a risk. State how implementing the

requirement will limit the insurer$$s exposure. $(10)$

Question $2(10$ marks$)$

Apart from your answers in Question $1,$ identify and suggest five more key risks

and discuss how they can be mitigated. $(10)$

Question $3(6$ marks$)$

$3\mathrm{.}1$ Research the difference between an EML and MPL and state whether you

agree with the insurer$$s determination thereof and why. $(3)$

$3\mathrm{.}2$ Recommend how the implementation of a sprinkler system and$/$or

firewalls providing compartmentalisation in the paint warehouse will be

able to reduce the EML, and what consequences it could have for both

the insured and the insurer.

The underwriter$$s response

Unfortunately, we have no appetite for this type of occupancy. However, because

of our long$-$standing relationship, we are prepared to offer you a $20\%$ line based

on $100\%$ Estimated Maximum Loss $($EML$),$ which is our maximum in accordance

with our reinsurance treaty.

We will not be able to offer you a lead line but are willing to follow a reputable

lead provided the terms are acceptable to us$\mathrm{.}1\mathrm{.}1$ Discuss what the underwriter means by the following terms in the

context of the scenario:

$$ Milpark Education Commercial Property and Business Interruption Insurance CPBI$01-7$ Assignment

April $2024$ Page $3$ of $21$

$1\mathrm{.}1\mathrm{.}1$ Occupancy. $(1)$

$1\mathrm{.}1\mathrm{.}2$ Appetite. $(1)$

$1\mathrm{.}1\mathrm{.}320\%$ line. $(1)$

$1\mathrm{.}1\mathrm{.}4$ Capacity. $(1)$

$1\mathrm{.}1\mathrm{.}5$ Lead line. $(1)$

$1\mathrm{.}1\mathrm{.}6$ Follow. $(1)$

$1\mathrm{.}2$ Calculate the total capacity of this underwriter and explain what this

means. $(2)$

$1\mathrm{.}3$ Explain what a co$-$insurance placement entails for this risk.