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  1. business
  2. accounting
  3. b. individual claim amounts on a particular insura

b. Individual claim amounts on a particular insurance policy can take the values $100, $150...

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Accounting

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b. Individual claim amounts on a particular insurance policy can take the values $100, $150 or $200. There is at most one claim in a year and the annua premiums are $60. A- The insurer must choose between three reinsurance arrangements. No reinsurance. Excess of loss reinsurance with a retention level of $150 for a premium of $10. Proportional reinsurance with a retention level of 25% for a premium of $20. B- (0) insurer. Complete the loss table for the (4 marks) Reinsurance arrangement A B - 60 Claim amount 0 100 150 200 (ii) Determine whether any of the reinsurance arrangements can be discounted/removed immediately from the viewpoint of the insurer. (2 marks) Determine the best choice for the insurer. (1 mark)

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