Gce Model Questions Vol1 2020 Commerce Question 10

An insurance company offers a motor‑vehicle policy whose premium is calculated on the insured value of the vehicle. The base premium is 2% of the insured value. Additional loadings are applied according to the driver’s age and a discount is given if the vehicle is fitted with an approved anti‑theft device. • Age loading: under 25 years – add 1.5% of the insured value; 25‑40 years – add 0.5%; over 40 years – add 0.2%. • Anti‑theft discount: subtract 0.3% of the insured value if the device is fitted. The company expects a claim frequency of 5% per policy year and that an average claim will equal 70% of the insured value. Administrative expenses are estimated at 5% of the premium. Three drivers are seeking cover: • Driver A: 22 years old, vehicle value ₦2,000,000, no anti‑theft device. • Driver B: 30 years old, vehicle value ₦1,500,000, with anti‑theft device. • Driver C: 45 years old, vehicle value ₦3,000,000, with anti‑theft device. Answer the following: