If the loss ratio on a line of insurance is 70 percent and loss adjustment expenses are 33 percent,then the line is profitable before dividends if the ratio of

Question

Quizplus · Accepted Answer

Losses + Adjustment Expense = 70 + 33 = 103
Need a net investment yield of at least 3 percent to reach profitability. That is, investment yields have to be at least 3 percent higher than commissions and other expenses. The only selection that meets this criteria is [commissions and other expenses are 16 percent and investment yields are 20 percent].

If the Loss Ratio on a Line of Insurance Is