An insurance company calculates its UPR using an individual, policy by policy approach. Calculate the UPR as at 31 December 2018 for the following annual policies:
(b) Premium £3,500. Commission 10%. Started 1 July 2018. Risk starts at zero and increases daily by a constant linear amount over the policy year.
Can someone explain how to solve this ?
solution given - £2,362.50 (75% of risk is outstanding at year-end, so the UPR is 75% of 90% of £3,500. Did not understand how 0.75 came ?
(b) Premium £3,500. Commission 10%. Started 1 July 2018. Risk starts at zero and increases daily by a constant linear amount over the policy year.
Can someone explain how to solve this ?
solution given - £2,362.50 (75% of risk is outstanding at year-end, so the UPR is 75% of 90% of £3,500. Did not understand how 0.75 came ?