Interactive Simulation · 9 min
Simulation: Price a Motor Fleet
Scenario
You're the pricing actuary at a mid-sized Ghanaian insurer. The underwriting team has referred a new motor fleet to you for pricing. 'Volta Transport Services' operates 25 long-distance coaches on routes from Accra to Tamale, Ho, and Kumasi. They want comprehensive motor cover for the entire fleet.
Fleet details: 25 coaches, average age 6 years, total fleet value GHS 7,500,000 (average GHS 300,000 per vehicle). They currently have third-party only with a competitor. They've provided 3 years of claims history from their current insurer showing 12 claims totalling GHS 420,000 (mix of own damage, windscreen, and two third-party injury claims).
Loss Cost Calculation
Using the burning cost method, calculate the pure risk premium for this fleet. Show your working.