Question

What is the key decision in determining the level of retention limits for insurers?

a.

Maximizing risk

b.

Minimizing profits

c.

Setting limits based on familiarity

d.

Setting limits to maximize expected profit while considering all risks

Posted under IC 92 Actuarial Aspects of Product Development

Answer: (d).Setting limits to maximize expected profit while considering all risks Explanation:The key decision in determining the level of retention limits for insurers is to set limits at a level where the expected profit is highest after considering all risks involved.

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Q. What is the key decision in determining the level of retention limits for insurers?
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