List the four building blocks of an insurance premium. Why are investment earnings included in the...

List the four building blocks of an insurance premium. Why are investment earnings included in the calculations?

Expert Solution

Four building blocks of insurance premium are as follows-

A. estimated cost of loss

B. Expenses of running and maintaining the insurance pool

C. Earnings on investment

D. Allowance for unexpected loss

Investment earnings are included into the building blocks of insurance premium because these earnings on investment are made upon the insurance premium which are collected always in advance and it is a liability for the company.

jeff jeffy answered 2 years ago

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List the four building blocks of an insurance premium. Why are investment earnings included in the...

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