Gce Model Questions Vol1 2019 Commerce Question 2
Practice objective / multiple choice question 2 from the 2019 Gce Model Questions Vol1 Commerce examination.
A motor‑insurance policy has a base premium of \(\N120,000\). The driver is classified as high‑risk, attracting a loading of 25 % on the base premium. An administrative fee of 5 % is charged on the sum of the base premium and the loading. Tax of 10 % is then applied to the amount after the administrative fee. Finally, a no‑claims discount of 15 % is given on the total after tax.\n\n(a) Calculate the final premium payable by the policyholder.\n(b) The insurer expects the average claim cost to be 70 % of the final premium and adds a 20 % loading on the expected claim to achieve profit. Determine the claim amount at which the insurer would break even (i.e. premium equals 1.20 × claim).
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This is Gce Model Questions Vol1 2019 Commerce Question 2. It is one of the objective questions from the 2019 Gce Model Questions Vol1 Commerce examination.
Difficulty level: Medium .
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