calculate the one-year premium for an auto policy, given the facts below. Anticipated losses = $8,000,000...

calculate the one-year premium for an auto policy, given the facts below.

Anticipated losses = $8,000,000

Number of autos insured = 200,000

Anticipated expenses = $2,000,000

Desired factor for reserves and profit = 4%

Expert Solution

Anticipated losses = $8,000,000

Anticipated expenses = $2,000,000

Total of anticipated expenses and losses = $10,000,000

Number of autos insured =200,000

Allocate anticipated sum to each auto = $10,000,000 / 200,000 = $50

Desired factor for reserves and profits = $50*4% = $2

So premium would be = $50+2=$52

I hope this will help you.

ekkarill92 answered 2 years ago

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