Mathematics

Question

An automotive insurance company has 30,000 policyholders, and the accident rate is 0.06. If the company needs to make a profit of $1,740,000 this year and the payout for each claim (after deductibles) is $8,200, the minimum premium it must charge is

2 Answer

  • Number of accidents = number of policyholders * accident rate = 30,000 * 0.06 = 1,800

    Total payout = payout per each claim * number of claims

    Number of claims = number of accidents

    => Total payout = $8,200 * 1,800 =   $ 14,760,000

    Total minimum premium = total payout + profit = $ 14,760,000 + $ 1,740,000 = $ 16,500,000.

    Minimum premum charge = total minimum premum / number of policyholders

    Minimum premium charge = $ 16,500,000 / 30,000 =  $550

    Answer: $ 550
  • Answer:

    The plato answer is $500

    Step-by-step explanation:

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