Answered

Find the best answers to your questions at Westonci.ca, where experts and enthusiasts provide accurate, reliable information. Experience the convenience of finding accurate answers to your questions from knowledgeable professionals on our platform. Get immediate and reliable solutions to your questions from a community of experienced professionals on our platform.

Insurance company A and B both are life insurance companies that pay claims to a designated beneficiary upon death of an insured life. Company A insures 10,000 lives and expects to receive 525 claims this year. Company B insures 8,700 lives and expects to receive 410 claims this year. The actual number of claims for company A will range 500 < 550. The actual number of claims for company B will range from 369 < 451. Who faces the most objective risk

Sagot :

Tundexi

Answer:

Company B will faces the most objective risk

Explanation:

Company A: As Company A, insures 10,000 lives and expects to receive 525 claims this year.

They will end up saving 947,500,000 and paying 52,500,000 (525 claims*100,000), considering each claim value to be 100,000. Here goes the calculation:

10,000 x 100,000 = 1,000,000,000

1,000,000,000 - 52,500,000 = 947,500,000.

Company B: As Company B, insures 8,700 lives and expects 410 claims this year.

They will end up saving 829,000,000 and paying 41,000,000 (410 claims x 100,000), considering each claim value to be 100,000. Here goes the calculation:

8700 x 100,000 = 870,000,000

870,000,000 - 41,000,000 = 829,000,000.

Hence, the margin of profit is good for company A. Company B will have the face the risk more.

Thanks for stopping by. We strive to provide the best answers for all your questions. See you again soon. Your visit means a lot to us. Don't hesitate to return for more reliable answers to any questions you may have. Thank you for visiting Westonci.ca. Stay informed by coming back for more detailed answers.