Avicenna an insurance company offers five year commercial

Last updated: 9/5/2023

Avicenna an insurance company offers five year commercial property insurance policies to small businesses If the holder of one of these policies experience property damage in the next five years the company must pay out 24 100 to the policy holder Executives at Avicenna are considering offering these policie for 916 each Suppose that for each holder of a policy there is a 4 chance they will experience property damage in the next five years and a 96 chance they will not If the executives at Avicenna know that they will sell many of these policies should they expect to make or lose money from offering them How much To answer take into account the price of the policy and the expected value of the amount paid out to the holder Avicenna can expect to make money from offering these policies In the long run they should expect to make dollars on each policy sold Avicenna can expect to lose money from offering these policies In the long run they should expect to lose dollars on each policy sold Avicenna should expect to neither make nor lose money from offering these policies