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Three Insurance Companies Agree to Jointly Insure a Cargo Ship

Question 68

Essay

Three insurance companies agree to jointly insure a cargo ship for $38.6 million. If insurers A, B, and C allocate premiums received and accept the risk in the ratio 3: 8: 5, respectively:
a) How will the annual premium of $900,000 be distributed?
b) What is the maximum claim exposure of each insurer?

Correct Answer:

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a) A = $168,750; B =...

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