The reason why insurance firms charge coastal inhabitants a premium that replicate the actuarial probability of harm from storms hurricanes and otherhurricanes.

Question

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Answer 1

Question

Chapter 12, Problem 1QP

Summary Introduction

To discuss: The reason why insurance firms charge coastal inhabitants a premium that replicate the actuarial probability of harm from storms hurricanes and otherhurricanes.

Expert Solution & Answer

Explanation of Solution

The insurance firm is pleased to charge a premium that replicate actuarial chances of death deprived of an extra risk premium. In difference, harmof flood is not self-governing across policyholders. When my seasidehomebased floods in a storm,there is a moreprobability that my neighbour’s will also. Since risk of flood is notdiversifiable, the insurance firmmight not be pleased with imposing a premium thatreplicates only the anticipated value of pay-outs.

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Answer 2

Question

Chapter 12, Problem 1QP

Summary Introduction

To discuss: The reason why insurance firms charge coastal inhabitants a premium that replicate the actuarial probability of harm from storms hurricanes and otherhurricanes.

Expert Solution & Answer

Explanation of Solution

The insurance firm is pleased to charge a premium that replicate actuarial chances of death deprived of an extra risk premium. In difference, harmof flood is not self-governing across policyholders. When my seasidehomebased floods in a storm,there is a moreprobability that my neighbour’s will also. Since risk of flood is notdiversifiable, the insurance firmmight not be pleased with imposing a premium thatreplicates only the anticipated value of pay-outs.

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Answer 3

Question

Chapter 12, Problem 1QP

Summary Introduction

To discuss: The reason why insurance firms charge coastal inhabitants a premium that replicate the actuarial probability of harm from storms hurricanes and otherhurricanes.

Expert Solution & Answer

Explanation of Solution

The insurance firm is pleased to charge a premium that replicate actuarial chances of death deprived of an extra risk premium. In difference, harmof flood is not self-governing across policyholders. When my seasidehomebased floods in a storm,there is a moreprobability that my neighbour’s will also. Since risk of flood is notdiversifiable, the insurance firmmight not be pleased with imposing a premium thatreplicates only the anticipated value of pay-outs.

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Answer 4

Question

Chapter 12, Problem 1QP

Summary Introduction

To discuss: The reason why insurance firms charge coastal inhabitants a premium that replicate the actuarial probability of harm from storms hurricanes and otherhurricanes.

Expert Solution & Answer

Explanation of Solution

The insurance firm is pleased to charge a premium that replicate actuarial chances of death deprived of an extra risk premium. In difference, harmof flood is not self-governing across policyholders. When my seasidehomebased floods in a storm,there is a moreprobability that my neighbour’s will also. Since risk of flood is notdiversifiable, the insurance firmmight not be pleased with imposing a premium thatreplicates only the anticipated value of pay-outs.

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Answer 5

Chapter 12, Problem 1QP

Summary Introduction

To discuss: The reason why insurance firms charge coastal inhabitants a premium that replicate the actuarial probability of harm from storms hurricanes and otherhurricanes.

Expert Solution & Answer

Explanation of Solution

The insurance firm is pleased to charge a premium that replicate actuarial chances of death deprived of an extra risk premium. In difference, harmof flood is not self-governing across policyholders. When my seasidehomebased floods in a storm,there is a moreprobability that my neighbour’s will also. Since risk of flood is notdiversifiable, the insurance firmmight not be pleased with imposing a premium thatreplicates only the anticipated value of pay-outs.

Answer 6

Chapter 12, Problem 1QP

Summary Introduction

To discuss: The reason why insurance firms charge coastal inhabitants a premium that replicate the actuarial probability of harm from storms hurricanes and otherhurricanes.

Expert Solution & Answer

Explanation of Solution

The insurance firm is pleased to charge a premium that replicate actuarial chances of death deprived of an extra risk premium. In difference, harmof flood is not self-governing across policyholders. When my seasidehomebased floods in a storm,there is a moreprobability that my neighbour’s will also. Since risk of flood is notdiversifiable, the insurance firmmight not be pleased with imposing a premium thatreplicates only the anticipated value of pay-outs.

Answer 7

Chapter 12, Problem 1QP

Summary Introduction

To discuss: The reason why insurance firms charge coastal inhabitants a premium that replicate the actuarial probability of harm from storms hurricanes and otherhurricanes.

Answer 8

Expert Solution & Answer

Explanation of Solution

The insurance firm is pleased to charge a premium that replicate actuarial chances of death deprived of an extra risk premium. In difference, harmof flood is not self-governing across policyholders. When my seasidehomebased floods in a storm,there is a moreprobability that my neighbour’s will also. Since risk of flood is notdiversifiable, the insurance firmmight not be pleased with imposing a premium thatreplicates only the anticipated value of pay-outs.