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First of all there is no insurance available against any event/risk which has fixed chance of occurence. However, the premium charged by an insurer is calculated as follows, of course as per acturial studies based on law of large numbers:-
Premium = (Probable loss x probability of loss)+G&A Expenses + Normal profit
First answer by ID3564537443. Last edit by ID3564537443. Question popularity: 1 [recommend question]
Answers.com > Wiki Answers > Categories > Business and Finance > Insurance > How do insurance companies calculate the premium for an event that has a fixed chance of occurring i.e. how do they turn the knowledge of a chance of an incident into premium?
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Insurance premium means? What does a premium depend upon? Chance given that an event will occur? A mathematical chance a event will occur? The chance that a given event will occur? Is gross premium net premium loading premium? What is the basis for fixing premium on insurance? The chance that a given event will occur usually expressed between 0 and 1? The chance that a given event will occur usually expressed between the number 0?
