Gce Model Questions Vol1 2018 Commerce Question 5
Practice objective / multiple choice question 5 from the 2018 Gce Model Questions Vol1 Commerce examination.
An insurance company offers a fire insurance policy with a sum insured of ₦5 000 000 for a small business. Historical data shows that the probability of a fire claim in a year is 0.004 and, if a claim occurs, the average claim amount is 80 % of the sum insured. The company adds a loading of 25 % to the pure premium to cover administrative expenses and profit. The regulator, however, caps the premium at 0.6 % of the sum insured. What is the maximum premium (in naira, to the nearest naira) that the company can charge while satisfying both the loading requirement and the regulatory ceiling?
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About This Question
This is Gce Model Questions Vol1 2018 Commerce Question 5. It is one of the objective questions from the 2018 Gce Model Questions Vol1 Commerce examination.
Difficulty level: Medium .
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