Ratemakers at ABC Insurance Company calculated the pure premium to be $280 for a risk they were considering insuring. What is the gross rate for this risk, assuming a 30 percent expense ratioA) $364

B) $400

C) $430

D) $520

Question

Business

Paxton Weiss

11 May, 08:41

Ratemakers at ABC Insurance Company calculated the pure premium to be $280 for a risk they were considering insuring. What is the gross rate for this risk, assuming a 30 percent expense ratioA) $364

B) $400

C) $430

D) $520

+1

Answers (1)

Know the Answer?

Carter Herrera · Answer 1

B) $400

Explanation:

Premium = $280

Expense Ratio = 30%

As we know:

Gross Rate = Premium rate + Expense rate

100% = Premium rate + 30%

Premium rate = 100% - 30%

Premium rate = 70%

Gross amount = (Premium / Premium rate) x 100%

Gross amount = ($280 / 70%) x 100%

Gross amount = 4 x 100%

Gross amount = $400

So, the correct answer is B) $400

Ratemakers at ABC Insurance Company calculated the pure premium to be $280 for a risk they were considering insuring. What is the gross rate for this risk, assuming a 30 percent expense ratioA) $364B) $400C) $430D) $520

Ratemakers at ABC Insurance Company calculated the pure premium to be $280 for a risk they were considering insuring. What is the gross rate for this risk, assuming a 30 percent expense ratioA) $364

B) $400

C) $430

D) $520