Question 3

Table 2 shows some data related to crime in different areas of England and Wales. When answering the questions that follow, assume that the rates of offences in each area in the year ending March 2018 are reliable indicators of the current annual risks of these offences.

Table 2 Rates of police recorded crime for burglary and vehicle offences for selected areas of England and Wales, year ending March 2018

Region	Burglary	Vehicle offences
North West of England	0.90%	0.80%
East of England	6.6 per thousand of population	6.8 per thousand of population
London	0.0087	0.0120
Wales	1 in 189 of population	1 in 208 of population

Source: adapted from Office for National Statistics (2018)

3.1 Transform the figures in Table 2 into one comparable measure of risk by expressing each probability as a decimal, rounded to four decimal places. (3 marks)

3.2 If occurences of vehicle offences and burglary are statistically independent, what is the chance of suffering both a vehicle offence and a burglary in the North West of England during the next year? Express your answer as a percentage and show all your workings. (3 marks)

3.3 Give two reasons why a particular household in London may in fact be at a lower risk of burglary than the probability shown in the table. (4 marks)

3.4 Briefly explain in your own words the meaning of moral hazard, and identify two ways in which an insurer can design a policy covering vehicle offences to reduce the risk of moral hazard. (5 marks)

(Total marks available for Question 3: 15 marks)

Word limit for Part A: 800 words