Question

AICUS (Auto Insurance Company of the United States) paid out $62,750,000 in car insurance claims last year. During that year,

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Answer #1

First question

Assuming that there was a way to determine who falls in which risk group, the company did not charge fair premium to each group as we can see with a simple metric, i.e., claim to premium ratio for these groups:

High risk: 250000 / 600 = 416.7

Medium risk: 1000 / 600 = 1.67

No risk: 0 / 600 = 0

Second question

The right answer is the third one, as it will bring the likely claim to premium ratios closer.

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