Concerned about the frequency and the severity of losses

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When underwriters review past losses, they are concerned about the frequency and the severity of losses. They often pay close attention to the number of losses that a business or homeowner has experienced, even if the losses have been small or resulted in no payment. Explain why an underwriter may pay such close attention to the frequency of losses. Do you think it is “fair” to include “no-payment” claims in an underwriter’s decision making process? Justify your opinion.

Reference no: EM131030202

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