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Question
Walter White works for Dodgy insurance company. Walter is given the task of predicting how many houses in a rural suburb in Victoria will be destroyed by a ?re in the next 12 months out of a sample of 3000 randomly chosen houses and assessing the degree of loss related to insuring these houses.
Part A.
Identify two factors that would increase the degree of risk and two factors that would decrease the degree of risk in the above scenario.
Part B.
Based on Walter's evaluation, assume that the insurance company has decided to accept the above risk. Should the insurance company insure more houses in the area? Why or why not?
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