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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

Respuesta :

hyderali230

Answer:

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

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