The table below shows historical performance of five profile groups. Based on th

Question

The table below shows historical performance of five profile groups. Based on this table, which profile group would you adjust the premium for in order to increase overall growth? Which profile group would you adjust the premium for in order to improve overall profitablity? Assume the number of quotes received is fixed. Explain your answer and fill in the blanks below (including the total row).

Profit Group Quotes Sales Closure Premium Losses 1 1,000 960 $1,000,000 $500,000 2 65 30 $15,000 $3,500 3 1,450 360 24.8% $1,550,000 $1,317,500 4 975 265 $980,000 $313,600 5 1,020 810 $820,000 $700,020 Total

Explanation / Answer

Closure is the percentage of sales/quote*100

The closure for all of them are as follows:

Profit group. Closure

1. 96

2. 46.15

3. 24.82

4. 27.179

5. 79.41

A. To achieve overall growth the premium should be adjusted for the profit group having highest closure which is Profit group 1.

B. To achieve overall profitability the premium should be adjusted to the group having the least losses which is Profit group 2.

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